ANNUAL REPORT 2011
Year ended March 31, 2011

Construction and Mining Machinery(Rock Drills)
Chemicals

MetalsElectronic Materials

Industrial Machinery

PaintsFuels and Others

Real Estate
UNIC Machinery

Profile
Since its establishment in 1875, Furukawa
has emerged from its origins in minedevelopment to build a broad range ofbusinesses while constantly addressing
the needs of the times. Over that period,
our business domain has diversified
to encompass industrial machinery,
construction and mining machinery (rockdrills), UNIC machinery, metals, electronicmaterials, chemicals, paints, real estate andfuels and others. Our core technologies,
amassed through our involvement in coppermine development, have advanced over
the years and form the basis of our current
business portfolio.
Furukawa is returning to its
roots as a manufacturer by drawing on its
technological tradition under the guidanceof its corporate philosophy—Innovation,
Creativity, and Harmony. Here, our aim is
to further improve competitiveness andmaintain growth that will permit the next
substantial leap forward.

Overview of Furukawa Company Group
Supporting urban development
through “Machinery”

2 Construction and Mining

1 Industrial Machinery

Machinery (Rock Drills)

Supporting social infrastructure
through “Copper”

3 UNIC Machinery

4 Metals

7

9

4
5

8

3

1

2

6
Supporting living spaces
through “Paints”

Supporting affluent lifestyles
through “Materials”

5 Electronic Materials 6 Chemicals

7 Paints

Supporting businessthrough “Real Estate”

8 Real Estate

Supporting business scenarios
through “Services”

9 Fuels and Others

Furukawa’s Technological Genealogy

Contents
1

To Our Stakeholders

2

Formulating Our Next
Medium-Term Management Plan

4

At a Glance

6

Review of Operations

8

Research and Development

13
9

Furukawa Initiatives and Systems

14

Consolidated Six-Year
Financial Summary

16

Financial Review

17

Corporate Data

50

Corporate History

51

Mine development technologies

Consolidated Financial Highlights

Exploitation
technologies

Conveyanceand concentration
technologies

Excavation technologies

Rock Drills

Hydraulic control
technologies

UNIC Machinery

Wastewater treatment
technologies
Pulverization technologies

Smelting
technologies

Machinery

Industrial Machinery

Waste gas treatment
technologies
Ore smelting technologies

MetalsSulfuric acid production
technologies

ChemicalsElectric technologies

Electronic Materials

Paint production
technologies

Paints

MetalsElectronic Materials
and Chemicals

PaintsReal Estate
Fuels and Others

Forward-Looking Statements
This annual report contains statements about the Company’s plans, strategies, performance outlooks, and the like, and includes forwardlooking statements that are not historical facts. Such statements reflect expectations, estimates, forecasts, projections, and plans based on
information currently available to the Company and are subject to various risks, uncertainties, and assumptions. These changing factors may
cause actual results to differ materially from those projected.
FURUK AWA001

Annual Report 2011

Consolidated Financial Highlights
Furukawa Co., Ltd. and consolidated subsidiaries
Years ended March 31, 2011, 2010 and 2009

Millions of yen

Thousands of
U.S. dollars

Percent change

2011/2010

2011

2010

2009

2011

¥ 165,638

For the year:¥ 142,925¥ 161,858$1,995,639

		

2,821

1,598

2,303

33,988

76.6

		

447

886

(2,618)5,386(49.5)

		

563

585

(5,917)

6,783

(3.8)

Total assets

		 196,234

204,774

188,3612,364,265(4.2)

Net assets

		

50,85545,742573,759(6.4)

Net sales
Operating income

15.9%

Income (loss) before income taxes
and minority interests
Net income (loss)
At year-end:
47,622Per share amounts:

U.S. dollars

Yen

Net income (loss):
Basic
Cash dividends

		

1.39

1.45

(14.64)

0.02

(4.1)

		

0.00

0.00

4.00

0.00

ー

Notes: 1. U.S. dollar amounts are translated from yen for convenience only at the rate of ¥83=US$1.00.
2. From the year ended March 31, 2007, what was formerly recorded as “shareholders’ equity” is now recorded as “net assets,” in line with revisions to Japanese accounting
standards as detailed in the Accounting Standards Board of Japan (ASBJ)’s “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Statement No. 5, December 9,2005) and its implementation guidance, “Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No. 8, December 9, 2005).
Figures for fiscal 2006 represent total shareholders’ equity
3. Effective the year ended March 31, 2011, the Company adopted “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Statement
No. 17, March 27, 2009) and “Guidance on the Accounting Standard for Segments of an Enterprise and Related Information” (ASBJ Guidance No. 20, March 21, 2008), which is new
accounting for disclosures about segments of an enterprise and related information. Segment information for the year ended March 31, 2010 has been restated in accordance with suchaccounting standards for comparative purposes.

Net Sales

Operating Income(Billions of yen)

Net Assets(Billions of yen)(Billions of yen)

55.4
213.4

52.1

16.9

200.7

50.9
47.6

45.7

14.4
165.6

161.9
142.9

Machinery
MetalsElectronic Materials and Chemicals
Paints2.3

Real Estate

2.8
1.6

Fuels and Others

‘07

‘08

‘09

‘10

‘11

‘10

‘11

‘07

‘08

‘09

FURUK AWA

1

Annual Report 2011

‘07

‘08

‘09

‘10

‘11

To Our Stakeholders

and Electronic Materials. Consolidated net sales for theyear amounted to ¥165,638 million, up 15.9% fromthe previous year. Major factors were an increase in
shipments primarily to China, the Middle East, and North
America, which boosted sales of the Construction and
Mining Machinery (Rock Drills) segment, as well as rising
prices of copper, which elevated sales of the Metals
segment.
Operating income jumped 76.6%, to ¥2,821
million, owing mainly to increased sales of theConstruction and Mining Machinery (Rock Drills), UNIC
Machinery, and Electronic Materials segments. This was
despite the negative impact on earnings of the strong

Nobuyoshi Soma
President and Representative Director

yen and deteriorating purchasing conditions in the
Metals segment, as well as a decline in rental income for
the Real Estate segment.
Turning to other expenses, the Group also posted

Business Conditions and Performancea ¥181 million write-down of investments in securities

In fiscal 2011, ended March 31, 2011, the Japaneseand a ¥67 million loss on disposal and sales of property,

economy in the first half showed signs of a turnaround.

plant and equipment.

In the second half, however, financial crises in Europe

The Group incurred a ¥216 million loss on

and uncertainty about the economic outlook for thedisaster associated with the earthquake, stated as an

United States provided the backdrop for appreciation

extraordinary loss. This was due primarily to suspensionof the yen and declines in stock prices. With the addedof operations at our main electronic materials plant in

impact of deflation, the domestic economy continued

Iwaki City, Fukushima Prefecture. Income before income

to mark time. The Great East Japan Earthquake, which

taxes and minority interests totaled ¥447 million, down

struck on March 11, 2011, not only caused directfrom ¥886 million in the previous year.
As a result, net income declined 3.8%, to ¥563

damage from the earthquake and tsunami, but also
disrupted the supply chain that serves as the core formillion.

Japan-style business efficiency. Other impacts included
limitations on electric power supply capacity. For

Great East Japan Earthquake: Impact

these reasons, the outlook for the Japanese economy

and Responses

incorporates major elements of uncertainty.

Fortunately, the Great East Japan Earthquake did not

Despite these challenging conditions, thecause injury to our employees or major damage to our

Furukawa Company Group proactively advanced its

facilities. However, the Iwaki Plant (located in Iwaki

business strategies, resulting in year-on-year sales

City, Fukushima Prefecture) sustained damage to someincreases for four business segments: Construction andequipment and was forced to temporarily suspend

Mining Machinery (Rock Drills), UNIC Machinery, Metals,

operations due to the nuclear power plant accident. By

FURUK AWA

2

Annual Report 2011

April 19, operations had resumed and the plant was

Accordingly, we have decided to position fiscal 2012 as

operating smoothly. In addition, Onahama Smelter anda period of reinforcing our foothold in preparation for

Refinery, a subcontractor in which the Company has

the new plan, which will start in April 2012. Under thean equity stake, suspended operations due to damage

new plan, we will step up basic policies outlined in thecaused by the earthquake and tsunami. Owing toprevious plan, which are to “promote further overseas

rigorous restoration work, however, that facility resumed

development and strengthen the technical capabilities

operations in July. Otherwise, demand trends and electricof the Machinery business” and “promote development

power restrictions may have an impact on operations,activities aimed at new product commercialization.”

but we will closely monitor the situation and are

At the same time, we are currently reformulating

confident of addressing any problems.

strategies centered on three core initiatives: “strengthen
the earnings foundation of the Machinery business,”

Shareholder Return“strengthen the development capabilities of the Materials

Furukawa places great importance on improving returns

business,” and “foster the “Fine-tech” business.”of profits to all shareholders while retaining earnings
required to finance capital expenditures and research andFinally, I would like to offer my prayers to the many

development expenses necessary to bolster earnings. Our

people whose lives were lost in the Great East Japanbasic policy is to appropriate profits after comprehensive

Earthquake, and extend my condolences to the many

consideration of future business development andpeople who suffered injury. From my heart, I pray forvarious other factors. Regrettably, the Company did notrecovery and restoration of the affected areas as soon as

declare cash dividends for the year under review. This ispossible.

because we have not yet achieved a full-scale recovery
in our business performance and have not reached the

We look forward to the ongoing understanding

stage in which we can appropriate dividends. In fiscal

and support of all stakeholders as we tackle future

2012, we do not plan to pay an interim dividend and arechallenges.

yet to decide on the year-end dividend.
August 2011

Medium-Term Management Plan
In the April 2008, the Furukawa Company Groupembarked on a Medium-Term Management Plancovering the three-year period to March 2011. Under theplan, we have promoted various growth strategies. Due
to dramatically changing economic conditions sparked
by the global financial crisis, however, our businessNobuyoshi Soma

results have differed significantly from our forecasts. In

President and Representative Director

light of this situation, we were formulating a new planthat was scheduled to start in April 2011, but the Great
East Japan Earthquake in March forced us to reassess ourassumptions related to the future business environment.

FURUK AWA

3

Annual Report 2011

Formulating Our Next Medium-Term Management Plan
Furukawa’s Corporate Philosophy and Business Strategies

The Furukawa Company Group’s corporate philosophy centers onin materials-related businesses, namely electronic materials andInnovation, Creativity, and Harmony. Guided by this philosophy,

chemicals. These are the culmination of effects to effectively utilize

we actively invest in and allocate resources to core businesses. By

by-products of the copper smelting process to develop advanced

manufacturing products filled with creativity, we continue meeting

materials. The Company has deployed its expertise in materials

the needs of society.

to develop solid businesses in machinery and materials. Going

Under our philosophy, we implemented our Medium-forward, we will further strengthen these businesses while at theTerm Management Plan covering the three-year period from April

same time fostering our “Fine-tech” business, which integrates our2008 to March 2011. With “Growing through Challenge” as its

capabilities in both machinery and materials at an advanced level.

slogan, the plan focused on two basic policies: (1) Strengthen

In the Machinery business (consisting of rock drills andthe technical capabilities of the Machinery business and promote

UNIC machinery), we will seek to expedite overseas advancement

further overseas development; and (2) Promote development

while further expanding our domestic market share, in order toactivities aimed at new product commercialization. Over the period

strengthen the earnings foundation. In rock drills, we will expandof the plan, the Group’s business was affected significantly by

our sales office network and introduce products that meet local

dramatically changing economic conditions with the worldwide

needs in China, a core market that we are targeting. At the same

economic recession. Nevertheless, we achieved some good results

time, we will open representative offices in India, Central andwith the aforementioned policies.

South America, Africa, and other nations earmarked for rapid

Our next Medium-Term Management Plan, designed tofuture growth. In addition, we will reinforce our sales and service

build on the basic policies of the previous plan, cites three corecapabilities, including the upgrading of offices to local subsidiaries.

initiatives: (1) Strengthen the earnings foundation of the Machinery

In UNIC machinery, we will focus on strengthening our presence inbusiness; (2) Strengthen the development capabilities of the

China, Russia, and India, where strong growth is expected, while

Materials business; and (3) Foster the “Fine-tech” business.

establishing optimal production frameworks in Japan, China, andAt this juncture, we would like to give an overview

Thailand.

and explain the position of these three businesses—machinery,In the Materials business, we leverage our knowledge andmaterials, and fine-tech—which we regard as pillars of ourexperience, acquired over many years, to develop new materials.

operations.

This effort is spearheaded by our Materials Research Laboratory.

Since our foundation in 1875, we have advanced ourOur aims are to strengthen our materials-related capabilities with

operations based on the core businesses of mine development andtwin emphases on versatility and distinctiveness. We will also strive

smelting, starting with the Ashio Copper Mine. While the metals

to increase customer satisfaction levels by delivering added value inbusiness requires technological expertise in deep ore extraction

our downstream business development activities.

and smelting, the mining business also calls for technological

Meanwhile we will integrate our capabilities in machinery

capabilities in other areas, such as excavation, transportation,and materials at an advanced level and promote our “Fine-tech”

wastewater treatment, crushing, and exhaust gas treatment.

business deploying leading-edge technologies, with the aim of

Our advancements in these technologies over the years led todeveloping distinctive new products.

our current machinery-related businesses, centering on rock
drills and industrial machinery. At the same time, we are strong

Next Medium-Term Management Plan
Strengthen the earnings foundation of the Machinery business
Strengthen the development capabilities of the Materials business
Foster the “Fine-tech” business

FURUK AWA

4

Annual Report 2011

Positioning of “Fine-Tech” Business
MachineryFine-Tech· Expedite overseas advancement· Further expand domestic market share

Materials· Develop new products that integrate leading-edgemachinery and materials technologies

Develop products tailored to local needs· Strengthen materials business· Materials + 1 (downstream advancement)

Alliance strategy

Develop new materials

Semiconductor
fabrication equipment

ZPS equipment
PEM equipment
Heat exchanger
Uniaxial screw pump

GaN substrate
EV reactor
Copper oxide for plating

Industrial
machinery

Rock drills

Commercialization projects

UNIC
machinery

Electronicmaterials

Chemicals

Paints

MetalsFine-Tech Business: Main Initiatives

Positron emission mammography (PEM) system using lutetium aluminum garnet (LuAG)
scintillator crystals

Gallium nitride (GaN) products
We will continue development activities aimed at commercializing GaN substrates,
which are expected to find widespread applications in the markets for laser diodes, lightemitting diodes (LEDs), and power devices. We have already established mass production
technologies for 2-inch substrates and are making
shipments to universities and research organizations. Goingforward, we will emphasize development of low-priced,
large-diameter products. Here, our plan is to promote theuse of GaN substrates in high-luminescence LEDs for nextgeneration illumination and other functions, as well as inpower devices in areas earmarked for considerable future
2-inch GaN substrates
growth, such as electric vehicles. In addition, we are in theprocess of developing samples of a GaN diode developed
by POWDEC K.K., in which Furukawa has an equity
stake. We are targeting applications for the diode in 600volt medium-pressure-resistant power supplies for use inpersonal computers (PCs), home electronic appliances,
GaN diode developed
and the like.
by POWDEC K.K.

Under a project sponsored by Japan’s New Energy and Industrial Technology
Development Organization (NEDO), Furukawa has completed a second PEM systemprototype (next-generation breast cancer screening system) using LuAG scintillator
crystals. At present, the system is undergoing clinical trials. Going forward, we will
target pharmaceutical applications in order to acceleratemarket introduction. If our PEM system reaches thepractical application stage, it will allow accurate detection
even of tiny cancers and enable proper examination
without incurring pain. For these reasons, it is highly
anticipated among medical institutions.

Second PEM system prototype

LuAG scintillator crystals

Thermoelectric conversion materials

Zone positioning system (ZPS)

Copper oxide for plating

Furukawa is in the process of developing a new typeof thermoelectric conversion material that converts
heat emitted from automobiles and factories into
electricity. We have already completed developmentof the basic material, which is currently being sampled
by automakers. In addition,
we have developed a package
containing the material for use
with stationary heat sources,
Thermoelectric conversion
and are presently conducting material
verification tests using heatprocessing furnaces. We will moveto the practical application stage
once performance is confirmed.

We have developed a ZPS that uses ultrasoundwaves to make 3D position measurements. We havealready delivered the system to data centers, medical
institutions, and logistics companies and are awaiting
feedback. We have great expectations for ZPS as arevolutionary type of positioning system. In the future,
we will seek to build next-generation security systems
that combine our ZPS with illumination and cameras,
with the aim of tapping new markets.

In recent years, printed circuit boards have become
more and more compact but require greater precision incopper plating processing than ever before. In response,
we have developed copper oxide for plating that
outperforms other products in terms of solubility andfluidity, and thus has earned
high acclaim. We completed
construction of a production
plant in April 2011 and started
full-scale deliveries in June.
Copper oxide for plating

Shield module

FURUK AWA

5

Annual Report 2011At a Glance% of Net Sales

28.4%
Machinery

MetalsSegments

Main Group Company

Industrial
Machinery

Furukawa Industrial
Machinery Systems Co.,
Ltd.

Construction and Mining
Machinery (Rock Drills)

Furukawa Rock Drill
Co., Ltd.

UNIC Machinery

Furukawa UNIC
Corporation

MetalsFurukawa Metals &Resources Co., Ltd.

Electronic
Materials

Furukawa Denshi
Co., Ltd.

Chemicals

Furukawa Chemicals
Co., Ltd.

Paints*Tohpe Corporation

Real Estate

Furukawa Co., Ltd.

Fuels

Furukawa CommerceCo., Ltd.

48.3%

Electronic
Materials
and Chemicals

7.4%

9.1%
Paints0.9%
Real Estate

5.9%
Fuels and Others

OthersFURUK AWA

6

Annual Report 2011

Main Products

Net Sales/Operating Income (Billions of yen)

Pumps, environmental machinery, stone
crushers, plants, steel structures, castings

67.8

75.8
47.0

44.3

(1.2)
(0.6)

(3.0)
’07

’08

Net Sales

’09

’11

’10

(6.8)
’07

’08

’09

’10

’11

Operating Income (Loss)

10.4

97.5

Metals

80.0

71.1

68.8

6.2

Electrolytic copper, electrolytic gold,
electrolytic silver, sulfuric acid

6.4
4.5

3.2
1.5

0.0
’07

’08

Net Sales

’09

’11

’10

1.9

0.0
’07

’08

’09

’10

12.7

13.1
2.1
15.9

15.3 1.5

11.4

11.0
0.8

12.2

9.5

1.5

6.9

0.2
’07

’11

Operating Income’08

Net Sales

’09

1.8
’11

’10

’07

’08

’09

’10

’11

(0.5)

(0.6)

’10

’11

Operating Income

15.0

3.7
(0.1)

(0.0)
’08

Net Sales

’09

’10

Paints

Kinds of paints, acrylic rubber, glue

’07

Electronic Materials
and Chemicals

Cuprous oxide, sulfuric acid, aluminum sulfate,titanium dioxide, ferric polysulfate solution,copper oxide, copper oxide for plating

2.8

1.7

84.8 8.8

High-purity metallic arsenic, gallium
phosphorous polycrystals, X-ray scintillator
crystals, aluminum nitride ceramics,
core coil, optical parts

9.0

Machinery

6.8

Rock drills (hydraulic breakers, hydrauliccrawler drills, tunnel drill jumbos, etc.)
UNIC cranes, mini crawler cranes,
UNIC PAL, UNIC carriers

8.7

62.6

5.9

Operating Margin (%)

’11

’07

’08

’09

Operating Income (Loss)

55.2

Construction/sales, mediation/brokerage,
other related services for office buildings
and apartments

2.8
0.8

’07

2.4
0.7

’09

2.0
1.6 0.6

’10

’11

28.6

27.2

’07

’08

’09

22.0

’07

16.7
(0.1)

(0.4)

(0.7)
’08

Net Sales

’09

10.7

(0.4)
’10

Operating Income (Loss)* New business launched in December 2009 when Tohpe Corporation became a consolidated subsidiary.
FURUK AWA

7

’10

’11

Operating Income

(0.6)

(1.4)

29.4

40.3

29.6

Annual Report 2011

(1.5)

9.8
(0.1)
’11

(3.0)
’07

’08

(3.8)
’09

’10

’11

Fuels and Others

Transportation service by trucks and domestic
shipping

0.7’08

Net Sales

Heavy oil, gasoline, diesel, kerosene,
lubricating oil, LPG, coke

1.1

Real Estate

2.9

Review of Operations
Industrial Machinery

Construction and Mining Machinery (Rock Drills)

Performance and Strategies

Performance and Strategies

In fiscal 2011, we reported a year-on-year increase in sales of sludge
and mud pumps thanks to a healthy performance of main pump units,
which compensated for depressed sales of shield pump components.
However, a decline in orders for bridge construction orders in theprevious year had a major negative impact, causing orders forstone crushers and other general machinery, as well as plant andcomponents, to stagnate. As a result, the Industrial Machinery segment
posted a 16.6% year-on-year decline in sales, to ¥10,655 million,
and an operating loss of ¥30 million (from operating income of ¥433
million in the previous fiscal year).
To address public sector demand, until now we have organized
our sales group along product-based lines. Going forward, however,
we will integrate this organization to create a Public Sector Group
that handles all products. This will enable us to centralize information
gathering, raise operating efficiency, and expand our marketing
activities. For the private sector, we will step up our industry-specificsales approach and leverage our strong track record in delivery of stone
crushers, electrostatic precipitators, and other equipment to promotetechnological solution proposals across the board. At the same time,
we will launch new and improved products on the market in order togenerate demand.
For example, we released PICO PUMP, a new uniaxial screw
pump that had been under development for some time. In addition
to the food industry, we will seek to expand sales of this pump bytargeting the cosmetics and hygiene-related sectors. In addition, we
anticipate increased demand for wet-type electrostatic precipitators
due to tightening regulations covering heavy metals. In response, wewill continue highlighting the benefits of our new, highly efficientfilter-type electrostatic precipitator to various sectors, including
nonferrous metals, iron and steel, and chemicals, as well as for garbage
incineration facilities.

In the domestic rock drills business, we enjoyed a recovery in demandfor breakers and crushers thanks to growing demand for hydrauliccrawlers, while sales of ultralow-noise breakers were also healthy.
Overseas, the yen’s appreciation highlighted difficulties on theearnings side. Nevertheless, we reported an increase in overseas
revenue thanks to steady sales of breakers in North America, Europe,and China, as well as solid sales of crawler drills in Southeast Asia andNorth America. Accordingly, the Construction and Mining Machinery(Rock Drills) segment posted a 17.1% rise in sales, to ¥23,880 million,
and an operating loss of ¥350 million (down ¥2,235 million from theprevious year).
In China, our business is facing intensified price competition
from local and South Korean companies. To counter this situation,
we will promote sales of locally assembled breakers. Meanwhile,
we will upgrade our sales and service network centering on China,
the rest of Asia, the Middle East, and Central and South America inorder to strengthen our service infrastructure. In Japan, we will focus
on expanding profitability by further increasing our market share forbreakers, crushers, and crawler drills.
Going forward, we will concentrate on developing nextgeneration strategic breaker equipment, crawler drills with enginesthat meet Japan’s fourth-generation exhaust emission regulations, andnew crawler drills for newly emerging countries. In these ways, we will
introduce competitive products that match market needs.
Hydraulic crawler drills

30%
65%
Global Market Japanese Market
Share
Share

Used at mines, quarries, civil engineering,and construction sites in Japan and overseas,
Furukawa’s hydraulic crawler drills boast the top
market share in the world.

Hydraulic breakers

40%Japanese Market
Share

Our mud pumps have a proud track record in wastewater treatment plants.

Hydraulic breakers, which are attached tohydraulic shovels, are used for excavating rockand breaking concrete.

Tunnel drill jumbos

90%
Japanese Market
Share
Electrostatic precipitators used for removing
particulates from gas emissions and dust
from the environment

New type of uniaxial screw pump featuring
improved compactness

FURUK AWA

8

Used for tunneling through mountains in roadand railway construction projects in Japan, tunnel
drill jumbos dominate the domestic market.

Annual Report 2011

UNIC Machinery
Performance and Strategies
In fiscal 2011, domestic truck registrations jumped 23.5% year on
year, to 51,000 units, enabling the Company to achieve a healthy sales
increase for UNIC cranes from the beginning of the period. Overseas,
the yen’s appreciation made conditions difficult from both theprofitability and sales promotion perspectives. Thanks also to healthy
demand in Russia, however, total overseas sales were up. Accordingly,
the UNIC Machinery segment posted a 12.1% increase in sales, to¥12,490 million, and an operating loss of ¥187 million (down ¥684
million from the previous year).
In Japan, we anticipate an increase in demand for UNIC
cranes for reconstruction following the Great East Japan Earthquake,as well as a boost in demand from the adoption of Japan’s Post New
Long-Term Emission Regulations. In this context, we will continue
aggressively promoting sales, focusing on the equipment rental sector.
In addition, we will step up sales of mini crawler cranes, folding-type
cranes (UNIC PAL), and ship cranes. Overseas, we will strengthen salesin Russia and other nations in a recovery trend, as well as in India,
Indonesia, and Australia. We will also sell competitively priced cranes
in newly emerging countries. Moreover, we will promote sales of mini
crawler cranes centering on North America, where recovery is under way.

Industrial Machinery
Net Sales

Operating Income (Loss)(Billions of yen)(Billions of yen)

30

2.0

1.0

0.4

17.3
15.8
14.1

0.1
0

12.8

(0.0)

10.7
10
-1.0

0

‘07 ‘08 ‘09 ‘10 ‘11-2.0‘07 ‘08 ‘09 ‘10 ‘11

Construction and Mining Machinery (Rock Drills)
Operating Income (Loss)

Net Sales

Truck-mounted cranes(UNIC cranes)

0.8 0.8

20(Billions of yen)(Billions of yen)

40

4.0

37.5

3.7
3.1

33.0

50%
Japanese Market
Share

3.0
29.4

30

2.0
23.9
1.0

20.4

20

0.3
0
(0.4)

The U-can ECO series of low-noise, fuel-efficient truckmounted cranes is slowly penetrating the market.

-1.0

10

-2.0

Vehicle carriers(UNIC carriers)

(2.6)
0

‘07 ‘08 ‘09 ‘10 ‘11-3.0‘07 ‘08 ‘09 ‘10 ‘11

50%Japanese Market
Share

UNIC Machinery
Net Sales
The UNIC carriers lineup of high-value-added products
includes truck-mounted cranes that can operate on a platform
with a 1˚ angle and two-vehicle carriers.

Operating Income (Loss)(Billions of yen)(Billions of yen)

30

4.0
3.0

2.7
2.3

20.6 21.0

2.0

20
17.4

Mini crawler cranes

1.0

11.1

12.5

0.7

0

(0.2)

10
-1.0

(0.9)

-2.0

Our exceptional mini crawler cranes have won high acclaim
for their compactness and operating efficiency, especially inEurope.

FURUK AWA90‘07 ‘08 ‘09 ‘10 ‘11

Annual Report 2011

-3.0

‘07 ‘08 ‘09 ‘10 ‘11Metals
Performance and Strategies
copper. However, operating income fell 53.6%, to ¥1,495 million, due
to deteriorating purchasing conditions.
At the present time, there are signs of recovery in purchasing
conditions thanks to changes in the supply-demand balance for ore.
However, conditions are expected to remain severe over the medium
and long terms. For this reason, we will seek to secure mining rights
overseas, with the aims of ensuring reliable copper ore procurement
and stabilizing profits.
Due to the Great East Japan Earthquake, operations weresuspended at Onahama Smelter and Refinery, a major refining vendor
of the Company, which led to a significant decline in production
volume. Owing to a tireless restoration effort, however, operations
were resumed in July 2011.

After starting the year at US$7,881.00/ton in April 2010, the price ofelectrolytic copper temporarily declined, but subsequently increasedon the back of favorable economic indicators from China and thedepreciation of the U.S. dollar following monetary easing in thatnation. The price then continued to rise due to positive employment
statistics in the United States and anticipation of demand growth inChina, hitting a record-high level of US$10,148.00/ton on February 14,
2011. Thereafter, however, the price softened due to surging crude oil
prices amid political turmoil in the Middle East and North Africa andconcerns that the Great East Japan Earthquake would impact the world
economy, and ended the fiscal year at US$9,399.50/ton. In Japan, theprice of electrolytic copper rose from ¥770,000/ton in April 2010 to¥830,000/ton by the fiscal year-end.
For the year, the Metals segment posted a 12.4% increase insales, to ¥79,980 million, owing to increases in the price of electrolytic

Copper prices and foreign exchange rates
2007

2008

2009

2011

2010

LME copper price (average; U.S. dollars/ton)

6,970

7,584

5,864

6,101

8,139

JPY rate per U.S. dollar (average for fiscal year)¥118.03¥114.28¥100.54¥92.85¥85.71

2007

2008

2009

2010

2011

Copper production volume (tons)

88,686

95,35590,02384,45589,523Copper sales volume (tons)

88,521

95,80888,98989,45689,176

Copper production and sales volume**Furukawa Metals & Resources Co., Ltd.

MetalsNet Sales

Operating Income(Billions of yen)(Billions of yen)

97.5

100

10
8.8

84.8
80.0

80
68.8

8

Copper cathodes

71.1
6.2

60

6

40

4
3.2

2

20

0

‘07 ‘08 ‘09 ‘10 ‘11

0

1.5
0.0

Onahama Smelting and Refining Co., Ltd.

‘07 ‘08 ‘09 ‘10 ‘11

FURUK AWA

Gibraltar Copper Mine in Canada

10

Annual Report 2011

Electronic Materials

Chemicals

Performance and Strategies

Performance and Strategies

In the year under review, demand for gallium arsenate semiconductors,
the main application for high-purity metallic arsenic, was healthy thanks
to solid demand for use in 3G mobile phone electronic devices in China
and for use in laser optical devices. We also enjoyed an increase in salesof core coils for use in automobiles in overseas server power sources.
As a result, the Electronic Materials segment posted a 19.7% increasein sales, to ¥7,147 million, and a 94.7% surge in operating income, to¥1,280 million.
The Great East Japan Earthquake led to suspension ofoperations at the Iwaki Plant, a key facility, but operations resumed
on April 19, 2011. Meanwhile, we will step up development of largediameter gallium nitride (GaN) substrates, currently the focus ofcommercialization efforts, targeting the markets for high-luminescencelight-emitting diodes (LEDs) and power devices. In addition, we will
steadily launch new products onto the market. These include an electric
reactor—a type of coil—we have developed for application in chargers
used in plug-in hybrid vehicles and electric vehicles.

During the period, the strong yen negatively impacted exports ofcuprous oxide, but domestic sales were healthy. Demand for sulfuric
acid for use in plasma display panels, solar cells, and water purification
facilities was also steady, and shipments of copper oxide for plating, a
new product, were also favorable. Accordingly, the Chemicals segment
reported a 1.0% rise in sales, to ¥5,076 million, and a 158.7% jump in
operating income, to ¥269 million.
Going forward, we will focus on high-value-added thinfilm sulfuric acid for use in applications where demand is expected
to continue growing. These include displays, solar cells, and soil
remediation. We will also concentrate on expanding sales of copperoxide for plating, having recently completed a production plant. We
look forward to increasing demand for this product for use in highprecision copper plating in electronic circuit boards and other devices.
At the same time, we will continue working to stabilize operations andreduce costs.

High-purity metallic arsenic

Cuprous oxide

Core coils

45%
Japanese (Production)
Market Share

65%
50%
Global Market Japanese Market
Share
Share

Our core coils are used in powersources and electronic control devices.

Cuprous oxide is used as an antifoulingagent in paints applied to the bottoms
of ships.

Gallium arsenate semiconductormaterials used in cellular phones andother electronic devices, red laser
diodes, and LEDs

Electronic Materials

Chemicals

Net Sales

Operating Income

Net Sales(Billions of yen)(Billions of yen)(Billions of yen)

Operating Income(Billions of yen)

20

2.0

15

2.0

15

1.5

12
1.5

1.4
1.3
9

10

9.4

1.0

8.8

1.0

1.0

6.5 6.5
5.8

6

7.1

0.5

0.5

5

0.7

5.0 5.1

0.7

5.6 6.0

0.5

3

0.3

0.2
0.1
0

‘07 ‘08 ‘09 ‘10 ‘11

0

0.0

0

‘07 ‘08 ‘09 ‘10 ‘11

FURUK AWA11

‘07 ‘08 ‘09 ‘10 ‘11

Annual Report 20110

‘07 ‘08 ‘09 ‘10 ‘11

Paints
The Paints segment was established in December 2009, whenequity-method affiliate Tohpe Corporation was transformed into a
consolidated subsidiary of the Furukawa Company Group. During theyear under review, Tohpe advanced its operations with an emphasis on
profitability while cutting costs through reorganization of its production
system, based on a business enhancement plan. The Paints segment
recorded sales of ¥15,041 million and an operating loss of ¥93 million.
Going forward, we will focus on sales of environmentallyfriendly paints and other highly
profitable products, while at the sametime pursuing cost-reduction efforts.

PaintsNet Sales

Operating Income (Loss)(Billions of yen)(Billions of yen)

20

1.0

15.0

15

0.5
10
0
5

0

(0.0)

3.7

‘07 ‘08 ‘09 ‘10 ‘11

-0.5

(0.1)

‘07 ‘08 ‘09 ‘10 ‘11

Real Estate
Revenue in the Real Estate segment declined due to rising vacancy
rates among office buildings in Osaka, a key center for our real estateleasing activities. In Tokyo, meanwhile, demolition work started at
the Furukawa Building as part of the Nihonbashi-Muromachi Eastern
District Redevelopment Project. The resulting departure of tenants also
affected revenue. The Real Estate segment posted a 22.8% decrease insales, to ¥1,578 million, and a 43.7% fall in operating income, to ¥635
million.
Completion of a new buildingis scheduled for the end of 2013.

Real Estate
Net Sales

Operating Income(Billions of yen)(Billions of yen)

3

2.9

1.5

2.8
2.4

1.1
2.0

2

1.0
0.8

1.6

0.7

0.7

0.6

0.5

1

0

‘07 ‘08 ‘09 ‘10 ‘11

Furukawa Osaka Building0‘07 ‘08 ‘09 ‘10 ‘11

Fuels and Others
In the fuels category, internal demand for petroleum products
continued retreating, which affected revenue. Sales in this business fell
9.0%, to ¥9,005 million, and operating loss was ¥57 million, up ¥28
million from the previous year.
In the Others category, consisting primarily of the transportbusiness, we reported an 8.1% decline in sales, to ¥786 million. Thanks
to our withdrawal from the compound lumber business, the operating
loss declined ¥285 million, to ¥92
million.
Sales in the Fuels and Others
segment declined 8.9%, to ¥9,791
million, and operating loss was ¥149
million (down ¥257 million from theprevious fiscal year).

FURUK AWA

Fuels and Others
Net Sales

Operating Income (Loss)(Billions of yen)(Billions of yen)

30

29.4

1.0

22.0

0.5

20
16.7
0
10.7
10

(0.1)

9.8
-0.5

(0.1)
(0.4)

(0.4)
(0.7)

0

12

‘07 ‘08 ‘09 ‘10 ‘11

Annual Report 2011-1.0

‘07 ‘08 ‘09 ‘10 ‘11Research & Development
Research and Development

The Furukawa Company Group has set “Full-Fledged Monozukuri” as one of its medium-to-long-term goals. The Group’s Research and Development Division
plays a key role in supporting initiatives aimed at providing “Technology for Our Future.”
The Division consists of seven entities: Nitride Semiconductors Department, Materials Research Laboratory, Techno-Research Laboratory,
Semiconductor Growth System Department, R&D Planning Department, Intellectual Property Department, and Control Department. As well as engaging inresearch and development activities on materials and machinery products of the future and on processing equipment in the interdisciplinary field of materials
and machinery, these entities use simulation and other technologies to support the development initiatives of each Group company. The Research andDevelopment Division contributes to the growth of the Group’s businesses by actively advancing research and development centered on new products andnew technologies.

Nitride Semiconductors Department

Techno-Research Laboratory

The Nitride Semiconductors Department develops and manufactures GaN substrates

The Techno-Research Laboratory supports the development activities of the Furukawa

used in the fabrication of GaN devices, which are next-generation semiconductor

Company Group’s Machinery segment by working in the areas of simulation technology

materials that transcend the limits of silicon semiconductors. Applications for GaN range

and enhancing the intelligence and data capabilities of machinery. Developmentfrom laser diodes in Blu-ray Discs through to power semiconductors, high-frequency

successes to date include fluid analysis for enhancing the performance of drifters—adevices used in telecommunications, and high-luminescence LEDs.

type of rock drill—and a system that predicts sudden changes in rock strata from

Following the successful development of a two-inch GaN substrate and morechanges in borehole noise. The Laboratory also

recently a four-inch GaN substrate, the Company is currently focusing on establishingengages in environmental- and recycling-related

mass production technology and technology for enhancing the quality of these GaN

research and development, such as technologies

substrates. Furthermore, in collaboration withfor processing heavy metals and for recovering

POWDEC K.K., an affiliate, we are also working

metals, and provides the Company’s affiliates withon the development of epitaxial GaN substrates.

assistance for developing cast steel and othermaterials.
Simulation of the internal flow of a hydraulic drifter

Semiconductor Growth System Department
Two-inch GaN substrate and the recently
developed four-inch GaN substrate

The Semiconductor Growth System Department develops and manufactures processing
equipment used in the manufacture of cutting-edge electronic materials, solar cells, flat
panel displays, and devices. It also develops metal organic chemical vapor deposition(MOCVD) equipment, crystal baking equipment, and film formation equipment for solar

Materials Research Laboratory

cell applications using the Company’s materials
and machinery technologies.

The Materials Research Laboratory develops various materials, such as scintillator crystals

In the year under review, the Company

and thermoelectric conversion materials, for cutting-edge applications in the electronics,

received an order from Taiwan for a large crystal

optical, and energy fields. The Laboratory is also pursuing research on the development

baking system. We also began marketing aof downstream applications for material technologies, including a PEM system and a

recently developed composite CVD system for

diffractive-optical element (DOE).

LEDs, and a system that cleans the parts of film

In addition to sampling LuAG scintillator crystals, the Company is collaborating

formation equipment.

with a university on the development of a PEM system that utilizes the characteristicsof these crystals. In the field of thermoelectric conversion materials, as well as samplingelements that can be used in moderate temperature regions, the Company is trial testing
modules and power generation units. The Laboratory is developing DOEs targeting
various applications, with a focus on elements that can control the shape of laser beams

Cleaning system for film formation equipment parts

R&D Planning Department
The R&D Planning Department is tasked with investigating and planning new

and the flux of LEDs.
The Company also develops new

development themes, promoting development by the Research and Development

materials for fields with substantial growthDivision and Group companies, as well as promoting the commercialization ofpotential, such as the fuel cell materials andsuccessful developments. In the area of commercializing newly developed products andprintable electronics fields.

systems, the department sells and promotes the ultrasonic zone positioning system (ZPS)
developed by the Techno-Research Laboratory and DOEs developed by the Materials
Research Laboratory.

Second PEM
system prototype

Thermoelectric
conversion
element module

LuAG scintillator crystals

A DOE can draw an image
using a single laser.

The ZPS measures the flow line ofworkers and a forklift.

Intellectual Property Department

Shield module

The Intellectual Property Department handles patent-related strategies and othermatters concerning intellectual property in order to increase the added value of the
Furukawa Copmany Group’s products.

FURUK AWA

13

Annual Report 2011

Furukawa Initiatives and Systems
Environmental Protection and Social Contribution Activities
The protection of the environment is one of the most important management issues at the Furukawa Company Group. Our fundamental policy is that each
employee should strive to perform all corporate activities in harmony with the environment, consider the improvement of the environment, and contribute to
the development of a sustainable society. We are aware of the important role we play in giving back to the community as a good corporate citizen.

Environmental Management

Environmentally Friendly Products

Environmental Management System
The senior decision-making body for environmental protection activities is
the Central Committee for Environmental Management, in which the senior
managing directors and managing directors participate. In addition, we have theEnvironmental Management Subcommittee, which makes proposals related toenvironmental protection activities and studies policies and guidelines to address
revisions of environment-related regulations.
Furthermore, the Committee of Environmental Protection Supervisors
meets every year, bringing together the people who directly guide and manage
environmental and safety initiatives in each Group company. At these meetings,
the Committee aims to fulfill four basic purposes: (1) convey and ensure theenforcement of decisions made by the Environmental Management Committee;(2) help improve the competency of environmental protection supervisors at eachGroup company; (3) prevent accidents and disasters through concerted efforts toshare information and reflect it in its daily business management; and (4) verify
revisions to environment-related regulations.

The Furukawa Company Group actively engages in the development of bothpeople-friendly and environmentally friendly products as part of its contribution
to the creation of a sustainable society.
U-can ECO EV
In July 2010, we launched the U-can ECO EV, a truck-mounted crane using a
hybrid system that can be recharged by plugging it into a home power outlet.
A battery to power the crane and an electricunit that employs proprietary motor control
technology have been added to create a newmodel that allows crane operation when the truck’s
engine has been switched off. The U-can ECO EV
produces zero CO2 emissions when the crane is inoperation*, and generates considerably less noise.
* Note: This does not include emissions produced through power generation orwhen recharging.
Electric Reactor
It is expected that an electric reactor—a type of coil—developed by the Furukawa
Company Group will be fitted to chargers used in hybrid plug-in vehicles which
are scheduled for release in 2012. Consequently, we intend to commence
production at the end of 2011 to ensure stablesupply to customers. Because this reactor, whichuses amorphous dust materials, provides greater
recharging efficiency compared with cores thatuse other materials, it reduces energy loss andhelps lower CO2 and NOX emissions.

Environment and Safety Audits
The Furukawa Company Group conducts annual “Environment and Safety
Audits.” In fiscal 2011, these audits gave priority to the theme of complete
compliance with rules. Also, each factory and site was checked for legal
compliance with the relevant rules using 100 new workplace audit items, as well
as a new environmental safety checklist and basic checklist covering labor healthand safety activities. Going forward, we will target the upgrading of control
systems related to environmental safety and labor safety while making theGroup’s internal networks more robust.
The year under review marked the third time that the Group conducted“cross audits,” in which each plant is audited by an environment protection
supervisor from another plant. We introduced the cross-auditing system withthe objective of improving the competence of auditors and the level of auditing
undertaken at the Group’s worksites. In fiscal 2011, the success of this system
was apparent in reciprocal learning and reciprocal education on wide-ranging
know-how, as well as in the increase in auditors’ knowledge and the expansionof personal networks.

Social Contribution Activities
The Furukawa Company Group seeks to live in harmony with local communities
through stewardship and maintenance of forests owned by Furukawa
and involvement in afforestation programs. We also participate in factory
neighborhood cleanup activities and preservation of the “Nikko-Suginamiki”(“Avenue of cedars in Nikko”), as well as accept internships and host factory
visits. Other activities include fund-raising activities, arranging blood-donor drives,
sponsorship of community events, helping preserve biodiversity, holding originalenvironmental activities, and loaning our land for free to local environmental
associations.
In March 2009, we formed the Ashio Cherry Blossom Planting Groupto promote the restoration of the natural environment in Ashio-machi in Tochigi
Prefecture, the home of Furukawa. A third tree-planting drive had been scheduled
for April 2011, but was cancelled due to the Great East Japan Earthquake.

Environmental Protection Activities
The Furukawa Company Group’s energy-saving activities center on achieving
medium-term targets for energy and resource consumption set every five years.
The results for the first set of targets (covering fiscal 2005–2009) and the targets
for the next five years (fiscal 2010–fiscal 2014) are shown below.
First Medium-Term Reduction Targets Base year: Fiscal 2004
Category

Fiscal 2009 (target)

Electricity

40% reduction of fiscal 2004 consumption

Achievement ratio
142%

Heavy oil

25% reduction of fiscal 2004 consumption

374%

Natural gas*

10% reduction of fiscal 2004 consumption(842)%

Water

25% reduction of fiscal 2004 consumption

101%

Waste discharge

35% reduction of fiscal 2004 consumption

142%

Preserving Biodiversity
The site of the former Kune Mine, situated in Hamamatsu City in Shizuoka
Prefecture, used to be home to a large number of Genji-botaru (Genji fireflies).
For the past several years, we have worked together with the local community on
a plan for the regeneration of fireflies in this area. Owing to genetic differences
between individual organisms, even those belonging to the same species, causedby their particular habitat, we have previously undertaken an environmental
survey of not only the river but also the entire
surrounding environment. Thanks to these
efforts, in June 2010 we confirmed a greaternumber of fireflies compared with the previous
year.

*Switched from heavy oil to natural gas, which produces fewer CO2 emissions
Calculation of achievement ratio: [(FY2004 results – FY2009 results) ÷ (FY2004 results –FY2009 target)] x 100%

Second Medium-Term Reduction Targets Base year: Fiscal 2006
Category

Fiscal 2014 (target)

CO2 emissions*

5% reduction of fiscal 2006 consumption

Water

5% reduction of fiscal 2006 consumption

Waste discharge

10% reduction of fiscal 2006 consumption*Forms of electricity used: Gasoline, kerosene, diesel oil, heavy oil, LPG, natural gas, and electricity

FURUK AWA

14

Annual Report 2011

Corporate GovernanceThe basic policy of the Furukawa Company Group is to contribute to society, our shareholders, and other stakeholders by building an efficient management
structure that will yield stable profits and increased corporate value through greater management transparency and continuous innovation in our corporate
structure. This policy binds the Group’s businesses together to ensure Group integrity, while enabling them to manage their individual operations under aflexible management structure with a clear focus on asset management and accountability for gain and loss. At the same time, Group businesses leveragecollective strengths to maximize corporate value by providing products and services that achieve customer satisfaction.

System of Corporate Governanceimportant management meetings. In addition, they receive business reports fromdirectors, audit business sites and subsidiaries, and monitor the performance of
duties carried out by directors. The audit function is further reinforced by the
Audit Office, an organization in charge of internal auditing. The Audit Office
is composed of six members who engage in auditing Groupwide operations
management and the execution of business operations. In order to ensure theefficiency and effectiveness of the audit function, Furukawa continuously works
to reinforce cooperation between the Audit Office, auditors, and independent
auditors, who together devise audit plans, review audit results, and share otheraudit-related information.

Furukawa maintains a Board of Directors comprising seven members, one ofwhom is appointed from outside the Group. The Board of Directors oversees theexecution of the Furukawa Company Group’s operations and in principle meetsonce every month, with additional meetings held as required.
To clearly separate management oversight functions from executivefunctions, accelerate decision-making, and clarify responsibilities, Furukawa has
adopted an executive officer system. At present, we have 16 executive officers,
five of whom concurrently hold positions as directors.
The Management Council sets the Furukawa Company Group’s
fundamental management policies and strategies and makes decisions onimportant matters. There is also a Management Committee, which meets
monthly to discuss the operations of Furukawa and its core companies, andprovides direction. Decisions made by the Management Council that involve theallocation of funds or other important management issues must be discussed
and approved by a resolution of the Board of Directors. Furthermore, importantmatters that have been determined by individual Group companies are discussed
and reviewed by the Board of Directors and other relevant bodies.
Furukawa uses an auditor system, with a Board of Auditors composedof two statutory auditors and three outside auditors. Pursuant to an audit policy
formulated by the Board of Auditors, auditors attend meetings of the Board of
Directors, the Management Council, the Management Committee, and otherCompliance and System of Risk Management
The Furukawa Company Group has formulated a Corporate Conduct Charter andan Employees’ Code of Behavior. Every effort is made to ensure that all membersof the Group are fully aware of and practice the principles contained in each.
Furukawa also recognizes effective risk management as an important
aspect of its business activities. In addition to identifying and assessing potential
risk and formulating preventive and response measures as well as remedial
initiatives, the Group has established the Risk Management & Compliance
Committee for the purpose of formulating the Group’s basic policies toward risk
management and compliance. Through these means, Furukawa is committed todeveloping a comprehensive structure capable of addressing all relevant issues.

Corporate Governance and Internal Control Systems

As of June 29, 2011

Annual General Meeting of Shareholders
Appoints/recalls

Appoints/recalls

Appoints/recalls
Reports

Independent Auditors

AuditsBoard of Directors

Reports

Board of Auditors

Reports

7 members(6 internal, 1 outside)

5 members(2 statutory, 3 outside)

AuditsExchanges opinions/information
Reports

Reports

Representative Director
Reports

Directs

Oversees

Management
Committee
Reports

Reports

Management
CouncilAuditsDirects

Executive Officers(16 members)

AuditsInternal Control Division
Audit Office
Risk Management &Compliance Committee

Business execution

Accounting Dept.,
othersAuditsAuditsReports

All Divisions and Group Companies

FURUK AWA

15

Annual Report 2011

AuditsConsolidated Six-Year Financial Summary
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31
Millions of yen

2011
For the year:
Net sales..................................................................... ¥ 165,638
Cost of sales............................................................... 		 146,364
Gross profit................................................................. 		 19,274
Selling, general and administrative expenses.................. 		 16,453
Operating income....................................................... 		
2,821
Income (loss) before income taxes andminority interests.................................................... 		
447
Net income (loss)........................................................ 		
563

2010

2009

2008

2007

2006

¥ 142,925
		 127,302
		 15,623
		 14,025
		
1,598¥ 161,858
		 143,651
		 18,207
		 15,904
		
2,303¥ 213,426
		 181,522
		 31,904
		 17,497
		 14,407¥ 200,749
		 167,507
		 33,242
		 16,343
		 16,899¥ 181,938
		 153,281
		 28,657
		 16,527
		 12,130

		
		

886
585

		
		

(2,618)(5,917)				

12,484
8,595

		
		

11,127
17,554

		
		

9,810
5,309

Cash flows from operating activities............................ 		
Cash flows from investing activities............................. 		
Cash flows from financing activities............................ 		

3,743(1,644)(5,703)

		
		
		

9,083
(3,643)(4,769)

		
		
		

5,112
(11,539)
12,116						

12,823(855)(13,835)

						

12,648(4,367)(8,910)

		
		
		

8,254
(336)
(18,086)

Capital expenditures................................................... 		
Depreciation and amortization.................................... 		
Reserch and development expenses............................ 		

1,933
3,290
2,225

		
		
		

2,936
3,244
1,862

		
		
		

16,507
3,145
1,752

		
		
		

4,374
2,993
1,941

		
		
		

3,905
2,626
1,888

		
		
		

1,777
2,595
1,859

At year-end:
Total assets................................................................. ¥ 196,234
Current assets............................................................. 		 80,199
Current liabilities......................................................... 		 70,456
Total equity................................................................. 		 45,849
Net assets (Note 1)...................................................... 		 47,622
Interest-bearing liabilities............................................ 		 89,265¥ 204,774
		 82,617
		 73,733
		 48,885
		 50,855
		 94,714¥ 188,361
		 77,509
		 64,276
		 44,585
		 45,742
		 92,475¥ 199,383
		 88,888
		 80,487
		 54,301
		 55,431
		 77,907¥ 217,027
		 94,865
		 89,293
		 56,246
		 52,136
		 89,389¥ 213,046
		 89,055
		 88,220		—		 43,072
		 99,418

Per share amounts:
Net income (loss):
Basic....................................................................... ¥Diluted.................................................................... 		
Cash dividends............................................................ 		
Net assets................................................................... 		

1.39
—
0.00
113.45

¥
		
		
		

1.45
—
0.00
120.96¥						(14.64)—ー
4.00
110.31

¥
		
		
		

21.26
—
6.00
134.33

¥
		
		
		

43.42
—
5.00
139.13

¥
		
		
		

13.12
12.37
3.00
106.52

Profitability:
Cost of sales margin (%)............................................. 		
Gross margin (%)........................................................ 		
SG&A expense margin (%).......................................... 		
Operating margin (%)................................................. 		
Return on sales (%).................................................... 		

88.4
11.6
9.9
1.7
0.3

		
		
		
		
		

89.1
10.9
9.8
1.1
0.4

		
		
		
		
		

88.8
11.2
9.8
1.4
(3.7)

		
		
		
		
		

85.1
14.9
8.2
6.8
4.0

		
		
		
		
		

83.4
16.6
8.1
8.4
8.7

		
		
		
		
		

84.2
15.8
9.1
6.7
2.9

Efficiency and soundness:
Return on equity (%) (Note 2)..................................... 		
Return on assets (%) (Note 3)..................................... 		
Debt-to-equity ratio (times) (Note 4)............................ 		
Equity ratio (%) (Note 5)............................................. 		

1.2
0.3
1.9
23.4

		
		
		
		

1.3
0.3
1.9
23.9

		
		
		
		

(12.0)
(3.1)
2.1
23.7

		
		
		
		

15.5
4.1
1.4
27.2

		
		
		
		

35.3
8.2
1.6
25.9

		
		
		
		

14.3
2.5
2.3
20.2

Investment indicators:
Dividend payout ratio (%) (Note 6).............................. 		
Dividends on equity ratio (%) (Note 7)........................ 		
Price book value ratio (times) (Note 8)......................... 		
Stock price at fiscal year-end....................................... 		

0.0
0.0
0.8
86

		
		
		
		

0.0
0.0
0.9
114

		
		
		
		

0.0
3.2
0.7
82

		
		
		
		

28.2
4.5
1.4
183

		
		
		
		

11.5
4.3
2.1
293

		
		
		
		

22.9
3.3
2.9
306

Yen

Notes: 1. Figures for fiscal 2006 represent total shareholders’ equity.
2. Return on equity = Net income / Average total equity × 100
3. Return on assets = Net income / Average total assets × 100
4. Debt-to-equity (D/E) ratio = Interest-bearing liabilities (fiscal year-end) / Total equity [Shareholders’ equity] (fiscal year-end)
5. Equity ratio = Total equity [Shareholders’ equity] (fiscal year-end) / Total assets (fiscal year-end) × 100
6. Dividend payout ratio = Total cash dividends / Consolidated net income × 100
7. Dividends on equity (DOE) ratio = Total cash dividends / Average net assets × 100
8. Price book value ratio (PBR) = Stock price (fiscal year-end) / Net assets per share

FURUK AWA

16

Annual Report 2011

Financial Review

N

Net Sales¥165,638 million, up 15.9% compared with the previous fiscal year.

(Billions of yen)

161.9

200

200.7

Within this amount, sales of the Metals segment increased 12.4%
year on year, to ¥79,980 million, thanks mainly to rising market prices

213.4

250

for electrolytic copper. Sales of the Construction and Mining Machinery(Rock Drills) segment rose 17.1%, to ¥23,880 million; sales of the UNIC

150

165.6

In fiscal 2011, ended March 31, 2011, consolidated net sales totaled

142.9

Revenue and Expenses

Machinery segment climbed 12.1%, to ¥12,490 million; and sales of
the Electronic Materials segment jumped 19.7%, to ¥7,147 million.

100

Cost of sales increased 15.0%, to ¥146,364 million, with the cost of
sales margin edging down 0.7 percentage point, to 88.4%.

50

Selling, general and administrative (SG&A) expenses rose 17.3%, to¥16,453 million. This was due primarily to Tohpe Corporation becoming

0a consolidated subsidiary in December 2009, which pushed up SG&A
As a result, operating income jumped 76.6% from the previous
fiscal year, to ¥2,821 million. This was due to a performance turnaround

‘10

‘11

T
R

(Billions of yen)

(%)

20

10

16.9
8.4

which reduced its operating loss ¥2,235 million. By contrast, the Metals

3

2
7.5

2

6.8

15

due to deteriorating profitability from refining operations. Accordingly,
the operating margin improved 0.6 percentage point, to 1.7%.

‘09

Operating Income
Operating Margin

by the Construction and Mining Machinery (Rock Drills) segment,
segment suffered a 53.6% fall in operating income, to ¥1,495 million,

‘08

14.4

expenses ¥2,139 million.

‘07

10

5.0

5

2.5

1

Under other income (expenses), interest and dividend income
climbed 36.1%, to ¥678 million, and interest expense to ¥1,527 million.

incurred a ¥216 million loss on disaster associated with the Great East

0Japan Earthquake (primarily from suspension of operations at our main

‘07

electronic materials plant in Iwaki City, Fukushima Prefecture) and a

Net Income (Loss)
Return on Sales

minority interests of ¥447 million. Total income taxes—the sum of
inhabitants’ tax, enterprise tax, and corporate income tax adjustments—

‘10

2.8

1.7

‘11

(Billions of yen)

20
15

0

N
R
(%)

10.0

17.6

As a result, the Group reported income before income taxes and

‘09

8.7

¥181 million write-down of investments in securities.

‘08

1.1

1.4
2.3

million on equity in earnings of affiliates. In other expenses, the Group

1.6

The Furukawa Company Group also posted other income of ¥1071

7.5

fell 62.4%, to ¥114 million. Minority interests amounted to ¥230
5.0

0Financial Position-5

At March 31, 2011, total assets stood at ¥196,234 million, down 4.2%
from a year earlier. Within this amount, total current assets declined

FURUK AWA

17

Annual Report 2011

-10

‘07

‘08

0.3
0.6

¥1.39, down ¥0.06 from the previous year.

2.5
0.6
0.4

5

0
-2.5

(3.7)

Return on equity (ROE) was 1.2%, and net income per share totaled（5.9）

down 3.8% from the previous year.

4.0

10
8.6

million. Accordingly, the Group posted net income of ¥563 million,

‘09

‘10

‘11

-5.0

equivalents and raw materials and supplies.

(Billions of yen)

213.4

Total investments and other assets250
decreased 12.0%, to ¥30,378

Net Income (Loss) per Share50

30

section and a decrease in long-term debt in the long-term liabilities
section. As a result, the fiscal year-end
100 balance of interest-bearing

20

20
10

liabilities (corporate bonds and debt) fell 5.8%, to ¥89,265 million.
6.4% from a year earlier. This was mainly due to a drop in unrealized-10

holding gain on securities, net of income
taxes. Consequently, the
0

-20

‘09

‘11

‘10

equity ratio edged down 0.5 percentage point, to 23.4%, and the debtIncome
to-equity ratio was unchanged, at 1.9 Operatingtimes.

‘08

‘09

‘10

‘11

0

Total Assets
Return on Assets(Billions of yen)

300

250

7.5

6.8

needs. In the year under review, total research and development

200

4.1

expenses amounted to ¥2,225 million, equivalent to 1.3% ofconsolidated net sales. Of this total, ¥68
10 million was allocated to the
5.0(Times

4

3
5.0

150

2.5
0.3

Industrial Machinery segment, ¥607 million to the Construction and
Mining Machinery (Rock Drills) segment, ¥174 million to the UNIC

(%)

10.0

7.5
196.2

14.4

materials and high-value-added products that meet diversified market

100

0.3

16.9
8.4

The Furukawa Company Group is actively engaged in R&D on new

204.8

10

188.4

(%)

199.4

(Billions of yen)

R&D and Capital Expenditures20

Debt

8.2

Operating Margin

15

‘07

217.0

‘08

10

0

Total net assets at fiscal year-end stoodat ¥47,622 million, down
50

‘07

1.39

mainly due to a decline in short-term150
loans in the current liabilities

21.26

30

（14.64）

142.9

Total liabilities were down 3.4%, to ¥148,612 million. This was

1.45

165.6

40
161.9

200.7

200

(%)

(Yen)

million, due mainly to a decline in investments in securities caused byfalling prices of listed shares.

Equi

43.42

NettoSales
2.9%, to ¥80,199 million, due mainly
decreases in cash and cash

0
1

1.7

50

0

2.8

1.6

2.3

segment.

0‘07 ‘08‘10 and‘11 the
Capital expenditures (increase in the tangible
fixed‘09assets

intangible fixed assets) amounted to ¥1,933
million.
Of this total, ¥175
Net Income(Loss)
on Salesmillion was allocated to the Industrial Return
Machinerysegment, ¥273 million

0

-2.5

(3.1)

1.1

1.4

5 Electronic Materials segment,
2.5
Machinery segment, ¥1,070 million to the¥68 million to the Chemicals segment, and ¥235 million to the Paints

2

‘07

‘08

‘09

‘10

‘11

-5.0

Net Assets
Return on Equity

0

Divid
(%)

10.0

60

40

5

segment, ¥87 million to the Electronic 15
Materials segment, ¥50 million
7.5

50

30

4

30

the transportation business. All funds requiredfor capital expenditures0
0

20

0.3
0.6

0.6
0.4

47.6

10
1.2

2.5

1.3

5

the Fuels and Others segment for the purchase of vehicles for use in

3

15.5

for maintenance of buildings owned by the Group, and ¥29 million to

50.9

20

40

4.0

8.6

5.0
addition, ¥308 million was allocated to 10
the Real Estate segment, mainly

45.7

8.7

to the Chemicals segment, and ¥340 million to the Paints segment. In

52.1

17.6

20

million to the UNIC Machinery segment, ¥149 million to the Metals

55.4

(%)

35.3

(Billions of yen)(Billions ofyen) Drills) segment, ¥160(%)
to the Construction and Mining Machinery
(Rock

2
0

10

The Group’s capital expenditure budget is based on comprehensive
-10

-5.0

‘07 ‘08‘09 ‘10‘11
consideration of various factors, including demand
forecasts,
production

FURUK AWA18

Annual Report 20110

-10

(12.0)

-2.5
(3.7)

-5
amortization rose 1.4%, to ¥3,290 million.

（5.9）

were derived from internal funds and borrowings. Depreciation and

‘07

‘08

‘09

‘10

‘11

-20

1

0

(B

23.4

25.9
21.26

30

23.9

165.6

142.9

Cash Flows

‘09

‘10

‘11

20

In the year under review, net cash provided by operating activities

150

(%)

30

40
161.9

200

200.7

and/or internal funds.

C
D

23.7

(Yen)

repair of existing ones. We expect to procure
50these funds via borrowings
43.42

250

a total of ¥3.3 billion, mainly for the purchase of new facilities and the213.4(Billions of yen)

Equity Ratio

27.2

Net Income(Loss)
per toShare
Net Sales plans, and investment benefits. In fiscal 2012,
the Groupplans
invest20

amounted to ¥3,743 million, down ¥5,340 million from the previous
1.39

1.45

10
year. The main factor was a decrease in inventories.

100

10

Net cash used in investing activities totaled ¥1,644 million, down
¥1,999 million from the previous year. The primary reason was purchasesof property, plant and equipment.

-10

Net cash used in financing activities totaled-20 ¥5,703 million, up ¥934
‘09

‘11

‘10

‘07

‘08

‘09

0

‘11

‘10

million from the previous year. This was due mainly to repayment of

Operating long-term
Incomedebt.
Operating Margin(%)(Billions of yen)(Times)

(B

4

2.5

2

100
earnings required to finance capital expendituresand research and

(3.1)

2.8

retained earnings to shareholders twice a year in the form of interim00‘07 and‘08 year-end‘09 ‘10 cash
‘11 dividends. The decision-making‘07 body‘08 for‘09 the‘10year‘11

-5.0

50.9

3.2

45.7

1.2

1.3

0.3
0.6

will also make effective0 investments aimed 20
at expanding overseas sales

10
2
0

-10

10

-10

(12.0)

-2.5
(3.7)

（5.9）

in existing businesses and entering markets for new products.
-5

‘09

3

15.5

4.0

30

administrative reforms, in order to reinforce our financial position. We
0.6
0.4

0

to further enhance operational management and strongly promote
2.5

4.3

47.6

20

55.4

5.0
40 deploy retained earnings
Facing difficult businessconditions, we will

35.3

17.6

8.6

5

‘08

(%)

4

appropriate dividends as shareholder returns.
10

(%)

30

business performance7.5
and have not reached50the stage in which we can‘07

Dividends on Equity (DOE) Ratio

5

60

52.1

15

0

40

10.0

This is because we have not yet achieved a full-scale recovery in our
8.7

20

‘11

-2.5

dividend is the Annual General Meeting
Shareholders, while that
NetofAssets
Net Incomeend(Loss)
Return on
Equity Regrettably,
Return on Sales
for the interim dividend is the Board of Directors’
meeting.
(Billions of yen) the Company did not (%)(Billionsyen) year under review.
declare cash dividends
forof the‘101Business Risks-5.0
0‘07 (1)‘08‘09 ‘10 in‘11the Foreign Exchange and Nonferrous
Fluctuations
Metals‘07 ‘08‘09 Markets‘10 ‘11FURUK AWA

19

-20

Annual Report 2011

1

0

‘07

‘08

‘09

0.0

1.7

1.1

1.4

50

1.6

2.3

0

0

2.5necessary to bolster earnings, as well as future
development expenses

business development and other factors. In principle, we appropriate

1.6

0.3

0.3

comprehensive consideration of various factors, including retained
5

1.9

4.1

to all shareholders. Our
to appropriate profits after
5.0 basic policy is 150

2.1

204.8

3
5.0

1.4

200

Furukawa places great importance on improving returns of profits
10

(%)

10.0

7.5
196.2

6.8

Capital Strategies

188.4

7.5

199.4

250
14.4

15

C

8.2

16.9
8.4

earlier.

217.0

20

totaled ¥16,271 million,
30019.7%, decline from a year
10 a ¥3,986 million, or‘08

Debt-to-Equity (D/E) Ratio

Total Assets
Return on Assets

As a result, cash and cash equivalents at the end of the fiscal year

(Billions of yen)

‘07

1.9

‘08

0.0

‘07

4.5

50

0

（14.64）

0

‘10

‘11

C

Net IncomeThe(Loss)
per Share
EquityRatio exchange fluctuations
Furukawa
Company Group is at riskof foreignin connection with its export business, the import of raw materials,
(%)

27.2

25.9

20
16.5

23.4

23.9

an internationally traded commodity, is subject to market movements.
While the Group utilizes foreign exchange contracts and forward delivery
21.26

30

15

20

transactions as a hedge against the aforementioned risks, its operating

20

results and financial position may be adversely affected by movements in

10exchange rates and nonferrous metal markets.

0

15

5

5.0

55.4

35.3

40

5

4.5

(%)
(%)
(Billions of yen)of return on plan assets
differs materially from the assumptions, as well as

47.6

4.3

50.9

retirement benefits are made.
30

(Yen)

6

The Furukawa Company Group’s operating results and financial position10

are at risk in the event of a suspension in operations and delays in

3.3
(5.7)

(4.8)
(1.6)

(3.6)

‘10

‘11

3

2

1.2

1.3

20

‘09

3

15.5

30

4

20 Natural Disasters(4) Earthquakes and Other(11.5)

(4.4)

(0.9)

‘08

Cash Dividends per Share

5

4

‘07

3.2

45.7

52.1

in the event of a change in the assumptions on which accrued employees’

-20

4.00

operatingresults(DOE)and Ratio
financial
Net Assets assumptions. Accordingly, the Group’s
Dividends
on Equity
Return on Equity
position are at risk in the event the actual discount rate and expected rate

(13.8)(3.1)

retirement benefits, the Group adopts assumptions in connection with the-5.0
0‘07 ‘08 ‘09 ‘10 ‘11‘07discount‘08 ‘09rate‘10
and‘11
expected rate of return on plan
assets, as well as other

-15

6.00

-2.5

plan assets at the balance sheet date. In calculating accrued employees’

-10

(8.9)

1.4

1
based on the retirement benefit obligationand the fair value of pension

60

-5

1.6

0.3

0.3

employees’ retirement 0benefits are provided at an amount calculated

50

0

5.00

1.9

1.9

2.1

4.1

funded employee pension plans as defined-benefit plans. Accrued

40

1.9

4.4
5.1

196.2

204.8

3

(3) Accrued Employees’ Retirement Benefits
188.4

Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities

10

7.5

‘11

(Billions of yen)movements in stock and land prices.

unfunded employee 2.5
retirement benefit
plans and non-contributory
2

100

50

‘10

The employees of the Furukawa Company Group are covered by

150

0

‘09

9.1

(Times)12.6(%)

impairment losses, losses
and losses on sales due to4
10.0 from devaluation,

199.4

8.2

217.0

200

the Group’s operating results and financial position are at risk of

‘08

3.7

‘11

‘10

2.9
3.2

‘09

Cash Flows

250

‘10

‘08

Total Assets
Debt-to-Equity(D/E) Ratiowas ¥16,265 million, while land stoodat ¥59,073 million.
Accordingly,
Return on Assets
300

‘09

‘07

‘07

(Billions of yen)

‘08

‘11

carrying value of investments in securities as stated in the balance sheets

12.1

balances of marketable securities and 0land. As of March 31, 2011, the

3.1

Historically, the Furukawa Company Group has maintained relatively high
‘07

3.0

-10

12.8

（14.64）5(2) Investments in Securities and Land

3.9

10

0

2.6

1.45

10

-20

(Billions of yen)

the Furukawa Company Group’s stock of nonferrous metal inventories,
23.7

40

primarily copper ore, and smelting and
30 processing income. In addition,

1.39

50

43.42

(Yen)

Capital Expenditures
Depreciation and Amortization

production and/or shipments
due to damage to manufacturing bases and
0

2

1

0.0

(5) Environmental Protection00-20Group places the‘07highest
importance‘08 ‘09‘10 ‘11 on‘07The‘08Furukawa‘09 ‘10 Company‘11

FURUK AWA

20

Annual Report 2011

0

‘07

‘08

‘09

0.00

1
0.00

-10

0.0

10

(12.0)

facilities from earthquakes and other natural disasters.

‘10

‘11

environmental protection, environmental safety, and prevention ofpollution at its various business sites, both in Japan and overseas,
respecting all laws and regulations. Furthermore, in Japan the Group isvigilant in preventing water run-off from idle mines from contaminatingwater supplies and in preventing the buildup of slag or slurry. However,in the event of changes in legislation and the like, there is a possibility
that the Group’s performance results and its financial position could be
influenced.
(6) Dilution of Shares Due to Exercise of New Stock Acquisition Rights
The Furukawa Company Group seeks to procure investment capital ina flexible manner to fund overseas investments and other initiatives. To
this end, the Board of Directors, at its meeting held on December 20,
2010, passed a resolution to issue new stock acquisition rights in a thirdparty allotment, with the recipient being Mizuho Securities Co., Ltd. The
new stock acquisition rights were subsequently issued on January 5,
2011. In the event that said rights are exercised, the per-share value of
the Company’s shares may become diluted.

FURUK AWA

21

Annual Report 2011

Consolidated Balance Sheets
Furukawa Co., Ltd. and consolidated subsidiaries
As of March 31, 2011 and 2010

Thousands of
U.S. dollars (Note 4)

Millions of yen

ASSETS
Current Assets:
Cash and cash equivalents . .........................................................................................
Receivables — trade:		 Notes and accounts .................................................................................................
		 Affiliates ..................................................................................................................
Finished products ........................................................................................................
Work in process ...........................................................................................................
Raw materials and supplies ..........................................................................................
Deferred income taxes (Note 15) .................................................................................
Other current assets ....................................................................................................
Allowance for doubtful accounts .................................................................................
		 Total current assets ..................................................................................................

2011

2011

2010

¥

16,271¥

20,257$

196,036

		
		
		
		
		
		
		
		
		

24,956242
11,217
5,183
13,263
2,098
7,142
(173)
80,199

		
		
		
		
		
		
		
		
		

23,984443
10,261
4,713
16,448
1,048
5,659
(196)
82,617

		
		
		
		
		
		
		
		
		

300,675
2,916
135,145
62,446
159,795
25,27786,047(2,084)966,253

		
		
		
		
		
		

60,93144,78250,121
1,295
645
157,774

		
		
		
		
		
		

61,165
45,10950,4291,041
359
158,103		734,109		
539,542		
603,868		
15,602
		
7,771
		 1,900,892

Accumulated depreciation ........................................................................................... 		
		 Property, plant and equipment, net ......................................................................... 		

(72,117)85,657

				

(70,458)
87,645

		 (868,880)
		 1,032,012

Investments and Other Assets:
Goodwill (Note 7) ........................................................................................................
Investments in securities (Notes 5 and 6) .....................................................................
Investments in affiliates ...............................................................................................
Loans receivable ..........................................................................................................
Deferred income taxes (Note 15) .................................................................................
Other investments .......................................................................................................

		
		
		
		
		
		

599
19,349
5,257
1,444
12
5,542

		
		
		
		
		
		

713
22,059
5,381
1,492
13
6,902

		
		
		
		
		
		

7,217
233,120
63,337
17,398145
66,771

Allowance for doubtful accounts ................................................................................. 		
		 Total investments and other assets .......................................................................... 		

(1,825)30,378				

(2,048)34,512				

(21,988)366,000

		 Total assets . ..........................................................................................................

196,234¥

204,774

Property, Plant and Equipment, at Cost (Notes 6 and 20):
Land and timberlands ..................................................................................................
Buildings and structures . .............................................................................................
Machinery and equipment . .........................................................................................
Lease assets (Note 11) .................................................................................................
Construction in progress .............................................................................................

¥

The accompanying notes are an integral part of these statements.

FURUK AWA

22

Annual Report 2011

$ 2,364,265

Thousands of
U.S. dollars (Note 4)

Millions of yen

LIABILITIES AND NET ASSETS
Current Liabilities:
Short-term loans (Note 6) ............................................................................................ ¥Current portion of long-term debt (Note 6) ................................................................ 		
Lease obligations (Note 6) ........................................................................................... 		

2011

2011

2010

12,85817,152
262

¥
		
		

13,077
20,222
207

$
		
		

154,916
206,651
3,157

		 Notes and accounts ................................................................................................. 		

23,586

		26,227

		

284,169		 Affiliates .................................................................................................................. 		

67

		

199

		

807

Accrued expenses ........................................................................................................ 		
Accrued income taxes . ................................................................................................ 		

12,375
438

		
		

9,880
183

		
		

149,096
5,277

Payables — trade:

Deferred income taxes (Note 15) ................................................................................. 		

13

		

102

		

157

Provision for restoration expenses for disaster ............................................................. 		

54

		

―—

		

651

Other current liabilities ................................................................................................ 		
			 Total current liabilities .......................................................................................... 		

3,651
70,456

		
		

3,636
73,733				

43,986
848,867

Long-term debt (Note 6) ............................................................................................. 		

59,255

		

61,415

		

713,916

Lease obligations (Note 6) ........................................................................................... 		

693

		

684

		

8,349

Accrued employees’ retirement benefits (Note 14) ...................................................... 		

1,625

		

1,589

		

19,578Provision for environmental measures . ........................................................................ 		

178

		

214

		

2,145

Long-term Liabilities:

Deferred income taxes (Note 15) ................................................................................. 		

9,499

		

8,869

		

114,446

Deferred income taxes on surplus on the revaluation of land (Note 15) ...................... 		

2,767

		

2,806

		

33,337

Asset retirement obligations ........................................................................................ 		

192

		

―—―

		

2,313

Other long-term liabilities ............................................................................................ 		

3,947

		

4,609

		

47,555

			 Total long-term liabilities ...................................................................................... 		

78,156

		

80,186

		

941,639

			 Issued—404,455,680 shares ............................................................................... 		

28,208

		

28,208		

339,855		 Retained earnings .................................................................................................... 		

17,310		

16,687

		208,554

			 2011—306,068 shares . ....................................................................................... 		

(46)

		

—

		

(554)

			 2010—298,479 shares . ....................................................................................... 		

—

		

(45)

		

—

		 Total shareholders’ equity ........................................................................................ 		

45,472

		

44,850		

547,855

294

		

2,791

		

3,542

Net Assets (Note 8):
Shareholders’ equity:
		 Common stock without par value:
			 Authorized—800,000,000 shares

		 Treasury stock, at cost:

Accumulated other comprehensive income:		 Unrealized holding gain on securities, net of income taxes ...................................... 		
		 Deferred (losses) gains on hedges . .......................................................................... 		

(110)

		

41

		

(1,325)

		 Surplus on the revaluation of land, net of income taxes ........................................... 		

3,289

		

3,348

		

39,627

		 Translation adjustments ........................................................................................... 		

(3,096)

		

(2,145)

		

(37,302)

			 Total other comprehensive income . ..................................................................... 		

377

		

4,035

		

4,542

		 Subscription rights to shares .................................................................................... 		

53

		

—

		

639

		 Minority interests . ................................................................................................... 		

1,720

		

1,970

		

20,723

			 Total net assets .................................................................................................... 		

47,622

		

50,855

		

573,759

			 Total liabilities and net assets .........................................................................

196,234¥

204,774

FURUK AWA

23¥

Annual Report 2011

$ 2,364,265

Consolidated Statements of Operations
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2011 and 2010

Thousands of
U.S. dollars (Note 4)

Millions of yen

Net Sales ....................................................................................................................... ¥Cost of Sales (Note 17) .................................................................................................. 		
		 Gross profit . ............................................................................................................ 		
Selling, General and Administrative Expenses (Note 10) . ........................................ 		
		 Operating income .................................................................................................... 		
Other Income (Expenses):
Interest and dividend income . ..................................................................................... 		
Equity in earnings (losses) of affiliates . ........................................................................ 		
Interest expense .......................................................................................................... 		
Other, net (Notes 18 and 20) ....................................................................................... 		
		 Income before income taxes and minority interests ................................................. 		
Income Taxes (Note 15):
Current ........................................................................................................................ 		
Deferred ...................................................................................................................... 		
		 Total ........................................................................................................................ 		
Income Before Minority Interests . ............................................................................. 		
Minority Interests ........................................................................................................ 		
		 Net income .............................................................................................................. ¥2011
165,638(146,364)
19,274(16,453)
2,821

¥
		
		
		
		

2010
142,925(127,302)
15,623(14,025)
1,598

678
107
(1,527)(1,632)
447

		
		
		
		
		

498
(83)
(1,680)
553
886

		
		
		
		
		

8,169
1,289
(18,398)(19,662)
5,386

(483)
369
(114)
333
230
563

		
		
		

(363)
60
(303)

		
¥

2
585

		
		
		
		
		
$

(5,820)4,446(1,374)
4,012
2,771
6,783

Yen

Net Income per Share:
Basic ............................................................................................................................ ¥Net Assets per Share . .................................................................................................. 		
The accompanying notes are an integral part of these statements.

FURUK AWA24

Annual Report 2011

1.39
113.45¥		2011$ 1,995,639
		 (1,763,422)
		
232,217
		 (198,229)
		33,988

U.S. dollars (Note 4)

1.45
120.96

$
		

0.02
1.37

Consolidated Statement of Comprehensive Income
Furukawa Co., Ltd. and consolidated subsidiaries
For the year ended March 31, 2011

Millions of yen

Income Before Minority Interests .....................................................................................................

¥

Thousands of
U.S. dollars (Note 4)

2011
333

$

2011
4,012

Other comprehensive loss:
Unrealized holding losses on securities, net of income taxes . ................................................................... 		
Deferred losses on hedges . ...................................................................................................................... 		
Translation adjustments ............................................................................................................................ 		
Share of other comprehensive loss
		 of associates accounted for using equity method . ................................................................................ 		
Total other comprehensive loss (Note 9) ................................................................................................... 		

(2,479)
(157)
(802)

		
		
		

(29,867)(1,892)(9,663)(164)(3,602)

				(1,976)(43,398)

Comprehensive loss .................................................................................................................................. 		

(3,269)		(39,386)

Comprehensive Loss Attributable toComprehensive loss attributable to owners of the parent ......................................................................... 		
Comprehensive loss attributable to minority interests . ............................................................................. 		

(3,036)
(233)

		
		

(36,579)(2,807)

The accompanying notes are an integral part of these statements.

FURUK AWA

25

Annual Report 2011

Consolidated Statements of Changes in Net Assets
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2011 and 2010

Millions of yen
Shareholders’ equity
Number ofshares ofcommon stock(thousands)

Balance as of March 31, 2010 ...................................................................... 		404,456
Cash dividends paid . ................................................................................... 		
—Net income for the year ............................................................................... 		
—Purchase of treasury stock ........................................................................... 		
—Reversal of surplus on the revaluation of land . ............................................ 		
—Net change during the year ......................................................................... 		
—Balance as of March 31, 2011 ...................................................................... 		404,456

Common stock

Retainedearnings¥ 28,208
		
—
		
—
		
—
		
—
		
—
¥ 28,208¥ 16,687
		
—
		
563
		
—
		
60
		
—
¥ 17,310

Treasury stock,at costTotal
shareholders’equity

¥
		
		
		
		
		
¥

¥ 44,850
		
—
		
563
		
(1)
		
60
		
—
¥ 45,472

(45)
—
—
(1)
—
—
(46)

Millions of yen
Accumulated other comprehensive income
Unrealized
holding gain
on securities,
net of income
taxes

Balance as of March 31, 2010 ......... ¥ 2,791
Cash dividends paid . ...................... 		
—Net income for the year .................. 		
—Purchase of treasury stock .............. 		
—Reversal of surplus on the revaluation of land 		—Net change during the year ............ 		 (2,497)
Balance as of March 31, 2011 ......... ¥294

Deferred(losses) gains
on hedges

Surplus on therevaluation ofland,
net of income
taxesTranslation
adjustments

Total
accumulated
othercomprehensive
income

¥
		
		
		
		
		
¥

¥ 3,348
		
—
		
—
		
—
		
—
		
(59)
¥ 3,289¥ (2,145)
		
—
		
—
		
—
		
—
		
(951)
¥ (3,096)¥ 4,035
		
—
		
—
		
—
		
—
		 (3,658)
¥
377

41
—
—
—
—
(151)
(110)

Subscription
rightsto shares

¥
		
		
		
		
		
¥

—
—
—
—
—
53
53

Minority
interests

Total
net assets¥ 1,970
		
—
		
—
		
—
		
—
		
(250)
¥ 1,720¥ 50,855
		
—
		
563
		
(1)
		
60
		 (3,855)¥ 47,622

Millions of yen
Shareholders’ equity
Number ofshares ofcommon stock(thousands)

Balance as of March 31, 2009 ...................................................................... 		404,456
Cash dividends paid . ................................................................................... 		
—Net income for the year ............................................................................... 		
—Purchase of treasury stock ........................................................................... 		
—Stocks of the parent company owned by new consolidated subsidiaries ...... 		
—Disposal of stocks of the parent company owned by consolidated subsidiaries . .... 		
—Loss on disposal of stocks of the parent company owned by consolidated subsidiaries . .. 		
—Reversal of surplus on the revaluation of land . ............................................ 		
—Net change during the year ......................................................................... 		
—Balance as of March 31, 2010 ...................................................................... 		404,456

FURUK AWA

26

Common stock

Retainedearnings¥ 28,208
		
—
		
—
		
—
		
—
		
—
		
—
		
—
		
—
¥ 28,208¥ 16,386
		
(606)
		
585
		
—
		
—
		
—
		
(4)
		
326
		
—
¥ 16,687

Annual Report 2011

Treasury stock,at costTotal
shareholders’equity

¥
		
		
		
		
		
		
		
		
¥

¥ 44,551
		
(606)
		
585
		
(2)
		
(52)
		
52
		
(4)
		
326
		
—
¥ 44,850

(43)
—
—
(2)
(52)
52
—
—
—
(45)

Millions of yen
Valuation, translation adjustments and others
Unrealized
holding gain
on securities,
net of income
taxes

Balance as of March 31, 2009 ............................. ¥ (2,076)
Cash dividends paid . .......................................... 		
—Net income for the year ...................................... 		
—Purchase of treasury stock .................................. 		
—Stocks of the parent company owned by new		—consolidated subsidiaries ................................
Disposal of stocks of the parent company owned by 		—
consolidated subsidiaries . ..................................
Loss on disposal of stocks of the parent company owned 		—by consolidated subsidiaries ..................................
Reversal of surplus on the revaluation of land . ... 		
—Net change during the year ................................ 		 4,867
Balance as of March 31, 2010 ............................. ¥ 2,791

Deferred(losses) gains
on hedges

Surplus on therevaluation ofland,
net of income
taxesTranslation
adjustments

¥
		
		
		
		

(138)
—
—
—
—

¥ 3,674
		
—
		
—
		
—
		
—

¥ (1,426)
		
—
		
—
		
—
		
—

¥
		
		
		
		

		

—

		

—

		

—

		

—

		

—

		

—

		
		
¥

—
179
41

		
— 		
— 		
—
		
(362) 		(719) 		 4,001¥ 3,348¥ (2,145) ¥ 4,035

Total valuation,translation
adjustments
and others

Minority
interests

Total
net assets

34
—
—
—
—

¥ 1,157
		
—
		
—
		
—
		
—

¥ 45,742
		
(606)
		
585
		
(2)
		
(52)

		

—

		

—

		

52

		

—

		

—

		

(4)

		
—
		
813
¥ 1,970		
326
		 4,815¥ 50,855

Thousands of U.S. dollars (Note 4)
Shareholders’ equity
Common stock

Balance as of March 31, 2010 .......................................................................................... $ 339,855
Cash dividends paid . ....................................................................................................... 		
—Net income for the year ................................................................................................... 		
—Purchase of treasury stock ............................................................................................... 		
—Reversal of surplus on the revaluation of land . ................................................................ 		
—Net change during the year ............................................................................................. 		
—Balance as of March 31, 2011 .......................................................................................... $ 339,855

Retainedearnings$ 201,048
		
—
		
6,783
		
—
		
723
		
—
$ 208,554

Treasury stock,at costTotal
shareholders’equity

$
		
		
		
		
		
$

$ 540,361
		
—
		
6,783
		
(12)
		
723
		
—
$ 547,855

(542)
—
—
(12)
—
—
(554)

Thousands of U.S. dollars (Note 4)
Accumulated other comprehensive income
Unrealized
holding gain
Surplus on theon securities,
Deferred
revaluation of
net of income (losses) gains on land, net oftaxes
hedgesincome taxes

Balance as of March 31, 2010 ......... $ 33,627
Cash dividends paid . ...................... 		
—Net income for the year .................. 		
—Purchase of treasury stock .............. 		
—Reversal of surplus on the revaluation of land.. 		
—Net change during the year ............ 		 (30,085)
Balance as of March 31, 2011 ......... $ 3,542

$
494
		
—
		
—
		
—
		
—
		 (1,819)$ (1,325)$ 40,337
		
—
		
—
		
—
		
—
		
(710)
$ 39,627

Translation
adjustments

Total
accumulated
othercomprehensive
income$ (25,843)
		
—
		
—
		
—
		
—
		 (11,459)$ (37,302)$ 48,615
		
—
		
—
		
—
		
—
		 (44,073)$ 4,542

The accompanying notes are an integral part of these statements.

FURUK AWA27

Annual Report 2011

Subscription
rightsto shares

$
		
		
		
		
		
$

—
—
—
—
—
639
639

Minority
interests

Total
net assets$ 23,735
		
—
		
—
		
—
		
—
		 (3,012)$ 20,723$ 612,711
		
—
		
6,783
		
(12)
		
723
		 (46,446)$ 573,759

Consolidated Statements of Cash Flows
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2011 and 2010

Thousands of
U.S. dollars (Note 4)

Millions of yen

2011
Operating Activities:
Income before income taxes and minority interests .....................................................
Adjustments to reconcile income before income taxes and minority
		 interests to net cash provided by operating activities:
		 Depreciation and amortization ................................................................................
		 Decrease in allowance for doubtful accounts, net . ..................................................
		 Increase in accrued employees’ retirement benefits .................................................
		 Loss on disposal and sales of property, plant and equipment . .................................
		 Write-down of investments in securities ..................................................................
		 Gain on sales of investment in securities ..................................................................
		 Gain related to copper smelting business in Australia ..............................................
		 (Decrease) increase in provision for environmental measures ...................................
		 Gain on sales of property, plant and equipment ......................................................
		 Interest and dividend income ...................................................................................
		 Interest expense . .....................................................................................................
		 Impairment loss on property, plant and equipment .................................................
Changes in operating assets and liabilities:
		 Receivables — trade ................................................................................................
		 Inventories ...............................................................................................................
		 Payables — trade .....................................................................................................
Other . .........................................................................................................................
		 Subtotal ...................................................................................................................
Interest and dividends received . ..................................................................................
Interest paid ................................................................................................................
Dividends income from investment in silent partnership ..............................................
Income taxes paid . ......................................................................................................
Income taxes refunded ................................................................................................
		 Net cash provided by operating activities .................................................................

2011

2010

¥

447

¥

886

$

5,386

		
		
		
		
		
		
		
		
		
		
		
		

3,290
(199)
874
152
181
(7)
—
(36)
(85)
(678)
1,527
100

		
		
		
		
		
		
		
		
		
		
		
		

3,244
(245)
820
306
0
(610)
(1,345)
214
(432)
(498)
1,680
266

		
		
		
		
		
		
		
		
		
		
		
		

39,639(2,398)
10,530
1,831
2,181
(84)
—
(434)
(1,024)(8,169)18,398
1,205

		
		
		
		
		
		
		
		
		
		
		

(941)
1,459
(2,391)
(117)
3,576
734
(1,567)
—
(583)
1,583
3,743

		
		
		
		
		
		
		
		
		
		
		

200
(145)
3,994
(555)
7,780
661
(1,675)
3,944(2,622)
995
9,083

		
		
		
		
		
		
		
		
		
		
		

(11,337)
17,578(28,807)(1,411)
43,084
8,843(18,880)—(7,024)
19,07345,096

Investing Activities:
Purchases of property, plant and equipment ...............................................................
Proceeds from sales of property, plant and equipment ................................................
Purchases of investments in securities . ........................................................................
Proceeds from sales of investments in securities ..........................................................
Purchases of stocks of subsidiaries and affiliates ..........................................................
Collection of investments in capital .............................................................................
Payment for purchases of investments in subsidiaries ..................................................
Other . .........................................................................................................................
		 Net cash used in investing activities .........................................................................

		
		
		
		
		
		
		
		
		

(1,896)
173
(4)
17
0
0
—
66
(1,644)

		
		
		
		
		
		
		
		
		

(2,929)1,070(1,123)
1,372(2,053)210(198)
8(3,643)

		
		
		
		
		
		
		
		
		

(22,843)
2,084
(48)
205
0
0
—
795
(19,807)

Financing Activities:
Proceeds from long-term debt .....................................................................................
Repayment of long-term debt .....................................................................................
Proceeds from short-term loans ...................................................................................
Repayment of short-term loans ...................................................................................
Cash dividends ............................................................................................................
Repayments of finance lease obligations .....................................................................
Other . .........................................................................................................................
		 Net cash used in financing activities . .......................................................................
Effect of Exchange Rate Changes on Cash and Cash Equivalents ..........................
Net (Decrease) Increase in Cash and Cash Equivalents . ..........................................
Cash and Cash Equivalents at Beginning of Year .....................................................
Cash and Cash Equivalents at End of Year ................................................................

		
		
		
		
		
		
		
		
		
		
		
¥

15,110(20,340)
3,132(3,350)—(290)
35(5,703)(382)(3,986)
20,257
16,271

		
		
		
		
		
		
		
		
		
		
		
¥

17,930(18,606)
2,511(5,954)
(606)
(165)
121
(4,769)243
914
19,343
20,257

		
		
		
		
		
		
		
		
		
		
		
$

182,048(245,060)
37,735(40,361)—(3,494)421(68,711)(4,602)(48,024)
244,060
196,036

The accompanying notes are an integral part of these statements.

FURUK AWA28

Annual Report 2011

Notes to Consolidated Financial Statements
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2011 and 2010

1. Basis of Presentation
The accompanying consolidated financial statements of Furukawa

information which is not required under accounting principles

Co., Ltd. (the “Company”) and consolidated subsidiaries (together

generally accepted in Japan but is presented herein as additional

the “Furukawa Group”) have been prepared in accordance withinformation.

accounting principles generally accepted in Japan, which are different

In preparing these statements, the Company has made certainin certain respects as to the application and disclosure requirements ofreclassifications and rearrangements to the consolidated financial

International Financial Reporting Standards, and have been compiled

statements prepared in Japan in order to present these statements infrom those prepared by the Company as required under the Financial

a form which is more familiar to readers outside Japan.

Instruments and Exchange Law of Japan.

Certain amounts in the prior year’s financial statements have

The notes to the consolidated financial statements include

been reclassified to conform to the current year’s presentation.

2. Summary of Significant Accounting Policies(1) Principles of Consolidationor other securities. The Furukawa Group does not hold any trading

The Company had 44 subsidiaries as of March 31, 2011 (46 as ofor held-to-maturity securities as of March 31, 2011 and 2010.

March 31, 2010). The consolidated financial statements included theMarketable securities classified as other securities are carried at fairaccounts of the Company and 43 subsidiaries as of March 31, 2011

value with changes in unrealized holding gain or loss, net of the(45 as of March 31, 2010).

applicable income taxes, included directly in net assets. Fair value isCompared with the previous year, the number of subsidiaries

determined based on the average of the market value during the lastdecreased by 2 subsidiaries due to completion of liquidation.

month of the fiscal year. Non-marketable securities classified as otherFor the purpose of preparing the consolidated financial

securities are carried at cost. Cost of securities sold is determined bystatements, all significant inter-company transactions, accountthe moving average method.

balances and unrealized profits among the Furukawa Group have(4) Inventories

been eliminated.
Certain foreign subsidiaries have been included on the basis of a

Finished products and work in process relating to copper products

fiscal year-ended on December 31, but prior to the parent company’s

are stated at cost determined by the moving average method (thefiscal year-ended of March 31. Relevant adjustments have beenbalance sheets amounts of the inventories are stated at the loweredmade for significant transactions with such subsidiaries during thebook values reflecting potential decline in profitability). Other

intervening period from January 1 to March 31.

inventories are mainly stated at cost determined by the average

The Company had 17 affiliates as of March 31, 2011 (17 affiliates

method (the balance sheets amounts of the inventories are stated at

as of March 31, 2010) and the equity method was applied to 7

the lowered book values reflecting potential decline in profitability).

affiliates as of March 31, 2011 (7 affiliates as of March 31, 2010) in(5) Allowance for Doubtful Accounts

preparing the consolidated financial statements.
Investments in the remaining unconsolidated subsidiaries andIn order to cover probable losses on collection, the allowance foraffiliates are carried at cost because of their immaterial impact on the

doubtful accounts is calculated based on the historical default

consolidated financial statements.

rates for normal receivables plus estimate of uncollectible amounts
determined by reference to specific doubtful receivables from

(2) Cash and Cash Equivalents

customers who are experiencing financial difficulties.

Cash and cash equivalents include all highly liquid investments with a(6) Provision for Environmental Measuresmaturity of three months or less when purchased.

Provision for environmental measures is provided to cover the disposal(3) Investments in Securities

costs anticipated to be incurred with respect to the “Law Concerning

Securities other than equity securities issued by subsidiaries andSpecial Measures for Promotion of Proper Treatment of PCB Wastes.”

affiliates are classified into three categories: trading, held-to-maturity

FURUK AWA

29

Annual Report 2011

(7) Property, Plant and Equipment and Depreciation

than the average remaining years of service of the employees.

Property, plant and equipment are stated at cost. Depreciation ofActuarial gain and loss is amortized in the year following the year

property, plant and equipment except for lease assets is mainlyin which the gain or loss is recognized by the straight-line method

calculated by the straight-line method based on the estimated usefulover the period of mainly 15 years, which is shorter than the average

lives of the assets. The range of useful lives of property, plant andremaining years of service of the employees.

equipment is summarized as follows:
Buildings and structures

5 to 60 years(10) Surplus on the Revaluation of Land

Machinery and equipment

2 to 22 years

Pursuant to the “Law Concerning the Revaluation of Land,” land

Amortization is calculated by the straight-line method forused for the Company’s business operations was revalued on Marchintangible assets.

31, 2002. The income tax effect of the difference between the book

Depreciation of lease assets arising from finance lease transactions

value and the revalued amount has been presented under liabilities

that do not involve transfer of ownership is calculated by the straight-

as “Deferred income taxes on surplus on the revaluation of land”

line method over the lease term with no residual value. Financeand the remaining balance has been presented under net assets aslease transactions that do not involve transfer of ownership, entered“Surplus on the revaluation of land, net of income taxes” in theinto on and before March 31, 2008, by the Company and domestic

accompanying consolidated balance sheets. Revaluation of landconsolidated subsidiaries are accounted for as operating leases.

was determined based on the official notice prices published by theCommissioner of the National Tax Authorities in accordance with

(8) Provision for Restoration Expenses for Disaster

Paragraph 4, Article 2 of the “Enforcement Ordinance Concerning

Provision for restoration expenses for disaster is provided to coverLand Revaluation,” with relevant adjustments. The carrying value ofthe restoration expenses for assets suffered from Great East Japanthe land after revaluation exceeded its fair value by ¥1,503 million

Earthquake anticipated to be incurred.

($18,108 thousand) and ¥1,453 million as of March 31, 2011 and2010, respectively.

(9) Retirement Benefit Plans
The employees of the Company and most of its domestic consolidated(11) Income Taxes

subsidiaries are covered by unfunded employee retirement benefit

Current income taxes comprising corporation tax, enterprise tax

plans and non-contributory funded employee pension plans as definedand inhabitants’ taxes are provided for based on amounts currently

benefit plans. The employee retirement benefit plans provide forpayable for each year. Deferred income taxes arising from temporary

lump-sum payments. The employee pension plans, which are funded,differences between financial reporting and tax bases of the assets

were instituted to replace a certain portion of the benefits under theand liabilities, which were measured using the enacted tax rates

retirement benefit plans with respect to employees who retire at theand laws which will be in effect when the temporary differences

mandatory retirement age. Certain consolidated subsidiaries (bothare expected to reverse, are reflected in the consolidated financial

domestic and foreign) have defined contribution plans.

statements.

Accrued employees’ retirement benefits have been provided at

The Company and its domestic wholly-owned subsidiaries file aan amount calculated based on the retirement benefit obligation andconsolidated corporation tax return.

the fair value of the pension plan assets at the balance sheet dates,
as adjusted for unrecognized actuarial gain or loss and unrecognized(12) Amounts per Shareprior service cost. The retirement benefit obligation has been

Basic net income per share is computed based on the net income

attributed to each period by the straight-line method over the years

available for distribution to shareholders of common stock and theof service of the eligible employees.

weighted-average number of shares of common stock outstanding

The net obligation at transition of the listed subsidiary, which

during the year. Diluted net income per share is not presented for theamounts to ¥1,940 million ($23,373 thousand), is being amortized by

years ended March 31, 2011 and 2010 since no dilutive instruments

the straight-line method over a period of 15 years.

were issued and outstanding during those years.

Prior service cost is being amortized as incurred by the straight-

Net assets per share are computed based on the net assets

line method over a period of principally 15 years, which is shorter

excluding minority interests and the number of common stock
outstanding at the year-end.

FURUK AWA30

Annual Report 2011

(13) Foreign Currency Translation

on hedged items when those derivative financial instruments qualify

Foreign currency denominated monetary assets and liabilities arefor hedge accounting.

translated into Japanese yen using the rates of exchange in effect at

Trade receivables, trade payables and forecast transactions

the balance sheet date. Differences arising from the translation are

denominated in foreign currencies are translated at the contracted

included in the consolidated statements of income.

rates if the relating forward contracts qualify for hedge accounting.

The balance sheet accounts of the foreign consolidated

The interest rate swaps which qualify for hedge accounting

subsidiaries are translated into yen at the rates of exchange in effectand meet specific matching criteria are not carried at fair value,at the balance sheet date, except for the components of net assets

but any differences paid or received on the interest rate swaps are

excluding minority interests, which are translated at their historical

recognized as adjustments to interest expense or income over theexchange rates. Revenue and expense accounts are translated at thelife of each swap, thereby adjusting the effective interest rate on the

average rate of exchange in effect during the year. Differences arisinghedged items.

from the translation are presented as translation adjustments and(15) Shareholders’ Equity

minority interests in the consolidated financial statements.

The Company Law of Japan provides that an amount equal to 10% of(14) Hedging Activities

the amount to be distributed as distributions of capital surplus (other

The Furukawa Group uses derivative financial instruments for thethan the capital reserve) and retained earnings (other than the legal

purpose of hedging the risks of adverse fluctuations in foreign

reserve) be transferred to the capital reserve and the legal reserve,

exchange rates on the trade receivables, trade payables and forecast

respectively, until the sum of the capital reserve and the legal reservetransactions denominated in foreign currencies, commodity prices andequals 25% of the common stock account. Such distributions can beinterest rates. All derivative financial instruments except below are

made at any time by resolution of the shareholders or by the Board ofstated at fair value and related gain or loss on the changes in the fair

Directors if certain conditions are met, but neither the capital reserve

values of derivative financial instruments is deferred as a component

nor the legal reserve is available for distributions.

of net assets in the balance sheet until the recognition of gain or loss

3. Accounting Changes(1) Accounting Standard for Equity Method of Accounting for

before income taxes and minority interests by ¥115 million ($1,386

Investments

thousand) compared with the corresponding amounts which would

Effective the year ended March 31, 2011, the Company adopted

have been reported under the previous method.

“Accounting Standard for Equity Method of Accounting forInvestments” (ASBJ Statement No.16, March 10, 2008) and “Practical(3) Accounting Standard for Business Combinations

Solution on Unification of Accounting Policies Applied to AssociatedEffective the year ended March 31, 2011, the Company adopted

Accounted for Using the Equity Method” (PITF No.24, March 10,“Accounting Standard for Business Combinations” (ASBJ Statement2008). The effect of adopting this new standard had no impact on

No.21, December 26, 2008), “Accounting Standard for Consolidated

the Company’s result of operations.

Financial Statements” (ASBJ Statement No.22, December 26, 2008),“Partial Amendments to Accounting Standard for Research and(2) Accounting Standard for Asset Retirement Obligations

Development Costs” (ASBJ Statement No.23, December 26, 2008),

Effective the year ended March 31, 2011, the Company adopted“Accounting Standard for Business Divestitures” (ASBJ Statement“Accounting Standard for Asset Retirement Obligations” (ASBJ

No.7, December 26, 2008), “Revised Accounting Standard for Equity

Statement No.18, March 31, 2008) and “Guidance on Accounting

Method of Accounting for Investments” (ASBJ Statement No.16,

Standard for Asset Retirement Obligations” (ASBJ Guidance No.21,

December 26, 2008) and “Revised Guidance on Accounting Standard

March 31, 2008). The effect of adopting this new standard was tofor Business Combinations and Accounting Standard for Businessdecrease operating income by ¥4 million ($48 thousand) and income

Divestitures” (ASBJ Guidance No.10, December 26, 2008).

FURUK AWA31

Annual Report 2011

(4) Consolidated Statement of Comprehensive Income

new standard, consolidated statement of comprehensive income for

Effective the year ended March 31, 2011, the Company adopted

the year ended March 31, 2010 is not presented. The comparative“Accounting Standard for Presentation of Comprehensive Income”

information for the year ended March 31, 2010 is disclosed in Note 9.

(ASBJ Statement No.25, June 30, 2010). In accordance with this

4. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollar amounts is included

translation should not be construed as a representation that yen havesolely for convenience, as a matter of arithmetic computation only, atbeen, could have been or could in the future be converted into U.S.

¥83=US$1.00, the exchange rate prevailing on March 31, 2011. Thisdollars at the above or any other rate.

5. Investments in Securities
The aggregate acquisition cost, carrying value and unrealized gain or loss pertaining to the marketable other securities as of March 31, 2011 and2010 were as follows:
Millions of yen

Thousands of U.S. dollars

2011

2011

Unrealized gain
Carrying value Acquisition cost(loss)

Securities whose carrying value exceeds their acquisition cost:
Listed corporate shares .......................................................... ¥		 8,362
		 8,362
Securities whose acquisition cost exceeds their carrying value:
Listed corporate shares .......................................................... 		 7,904
		 7,904
Total .......................................................................................... ¥		 16,266

¥		
		

5,421
5,421

		 10,472
		 10,472¥		 15,893

Carrying value Acquisition cost

Unrealized gain
(loss)

2,941
2,941

$		100,747
		100,747$		 65,313
		 65,313$		 35,434
		 35,434		 (2,568)
		 (2,568)¥		373

		 95,229
		 95,229$		195,976

		126,169
		126,169$		191,482

		 (30,940)
		 (30,940)$		 4,494¥				Millions of yen

2010
Carrying value Acquisition cost

Unrealized gain
(loss)¥ 14,886
		 14,886¥ 11,496
		 11,496¥ 3,390
		 3,390

Securities whose acquisition cost exceeds their carrying value:
Listed corporate shares .......................................................... 		 4,087
		 4,087
Total .......................................................................................... ¥ 18,973

		 4,586
		 4,586¥ 16,083

		
(500)
		
(500)
¥ 2,890

Securities whose carrying value exceeds their acquisition cost:
Listed corporate shares ..........................................................

Gain on sales of securities classified as other securities with aggregate gains and losses for the years ended March 31, 2011 and 2010 are
summarized as follows:

Millions of yen

Sales proceeds . ...................................................................................................................................... ¥Aggregate gains ..................................................................................................................................... 		
Aggregate losses .................................................................................................................................... 		

FURUK AWA32

Annual Report 2011

2011
2010
17
¥ 1,4917 		
610(3) 		
(12)

Thousands of
U.S. dollars

$
		
		

2011
205
84
(36)

6. Short-Term Loans, Long-Term Debt and Lease Obligations
Short-term loans, most of which are unsecured, represented notes payable to banks, with the average interest rates of 0.7% and 0.9% as ofMarch 31, 2011 and 2010, respectively.
Long-term debt as of March 31, 2011 and 2010 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2011
Loans, principally from banks, insurance companies and government agencies,¥		 76,407
most of which are secured, due 2011 to 2026 .....................................................................................
		 76,407
Current portion of long-term debt ......................................................................................................... 		 (17,152)¥		 59,255

2010¥		 81,637

2011$		920,567

		 81,637
		 (20,222)¥		 61,415

		920,567
		(206,651)$		713,916

The average interest rate applicable to the above loans amounting to ¥76,407 million ($920,567 thousand) was 1.6% and 1.7% as of March
31, 2011 and 2010, respectively.
The aggregate annual maturities of long-term debt subsequent to March 31, 2011 are as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

2012 . .........................................................................................................................................................................
2013 . .........................................................................................................................................................................
2014 . .........................................................................................................................................................................
2015 . .........................................................................................................................................................................
2016 and thereafter ...................................................................................................................................................

¥		 17,152
		 16,844
		 21,828
		 10,381
		 10,202¥		 76,407$		206,651
		202,940
		262,988
		125,072
		122,916$		920,567

Lease obligations as of March 31, 2011 and 2010 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2011
2010
955
¥
891
955 		
891
(262) 		
(207)
693
¥
684

2011
$ 11,506
		 11,506
		 (3,157)$ 8,349

Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

2012 . .........................................................................................................................................................................
2013 . .........................................................................................................................................................................
2014 . .........................................................................................................................................................................
2015 . .........................................................................................................................................................................
2016 and thereafter ...................................................................................................................................................

¥
		
		
		
		
¥

$ 3,157
		 2,940
		 2,542
		 1,795
		 1,072$ 11,506¥
		Current portion of lease obligations ...................................................................................................... 		
¥Lease obligations due 2011 to 2017 . .....................................................................................................

The aggregate annual maturities of lease obligations subsequent to March 31, 2011 are as follows:

FURUK AWA33

Annual Report 2011

262
244
211
149
89
955

The Company and certain consolidated subsidiaries have enteredcredit facilities amounted to ¥20,456 million ($246,458 thousand)into overdraft and loan commitment agreements amounting toand ¥19,568 million ($235,759 thousand), respectively, as of March¥40,024 million ($482,217 thousand) with 26 banks and ¥40,288

31, 2011 and amounted to ¥20,656 million and ¥19,632 million,

million with 27 banks as of March 31, 2011 and 2010, respectively.

respectively, as of March 31, 2010.

The borrowings outstanding and the unused balances under these
Assets pledged as collateral and liabilities with collateral pledged as of March 31, 2011 and 2010 were as follows:(a) Assets pledged as collateralThousands of
U.S. dollars

Millions of yen

2011
Investments in securities ........................................................................................................................
¥ 1,261
Property, plant and equipment, net ....................................................................................................... 		 6,611
Other current assets .............................................................................................................................. 		
—¥ 7,8722010¥ 1,839
		 7,086
		
87¥ 9,0122011$ 15,193
		 79,650
		
—$ 94,843(b) Liabilities with collateral pledged
Thousands of
U.S. dollars

Millions of yen

2011
Short-term debt ....................................................................................................................................
¥
100
Long-term debt (including current portion) ........................................................................................... 		 2,826¥ 2,9262010¥
300
		 2,812¥ 3,1122011$ 1,205
		 34,048$ 35,253

7. Goodwill
Goodwill and negative goodwill are netted against each other. The pre-netted amounts as of March 31, 2011 and 2010 were as follows:
Thousands of
U.S. dollars

Millions of yen

Goodwill ...............................................................................................................................................
Negative goodwill .................................................................................................................................
Net goodwill .........................................................................................................................................

¥
		
¥

2011
599
—
599

¥
		
¥

2010
760
(47)
713

2011
$ 7,217		—$ 7,217

8. Net Assets(1) Types and number of shares issued and in treasury
Thousands of shares
As of March 31,
2010

Shares issued:
Common stock .............................................................................................................. 		404,455
		 Total �������������������������������������������������������������������������������������������������������������������������� 		404,455
Treasury stock:
Common stock (Note) ��������������������������������������������������������������������������������������������������� 		
298
		 Total �������������������������������������������������������������������������������������������������������������������������� 		
298

Increase

		
		
		
		
		

Decrease

As of March 31,
2011

—
—

		
		

—
—

		404,455
		404,455

8
8

		
		

—
—

		
		

Note: The increase of 8 thousand shares of equity in treasury was due to the purchase of 8 thousand shares of less than a standard unit.

FURUK AWA34

Annual Report 2011

306
306

(2) Subscription rights to shares
Attribution
Parent company

Details of
subscription rights toshares (*2)

Type of shares to beissued upon exerciseof rights

Subscription rights toshares due 2016

Common stockThousands of shares

Millions of yen

Number of shares subject to be issued upon exercise of rights
As of March 31, 2011

Balance as of March
31, 2011—

100,000 (*1)—

100,000

53—

100,000—

100,000

53

As of March 31, 2010

Total

Increase

Decrease(*1) The increase of 100,000 thousand of subscription rights to shares due 2016 was due to issue subscription rights to shares.
(*2) All of subscription rights to shares can be exercised.

9. Other Comprehensive Income
The following table presents components of other comprehensive income for the year ended March 31, 2010:
Millions of yen

Unrealized holding gain on securities, net of income taxes ...................................................................................... ¥ 4,808
Deferred gain on hedges ......................................................................................................................................... 		
190
Translation adjustments ........................................................................................................................................... 		
(712)
Share of other comprehensive loss of associates accounted for using equity method . ............................................. 		
(8)
Total other comprehensive income ..................................................................................................................... ¥ 4,728
Comprehensive income (loss) attributable toMillions of yen

Comprehensive income attributable to owners of the parent . .................................................................................. ¥ 4,913
Comprehensive loss attributable to minority interests ............................................................................................... 		
(52)
		 Total . .................................................................................................................................................................. ¥ 4,861

10. Research and Development Expenses
Research and development expenses, included in selling, general and administrative expenses and cost of sales for the years ended March 31,
2011 and 2010 amounted to ¥2,225 million ($26,807 thousand) and ¥1,862 million, respectively.

11. Leases
Leases’ accounting(1) Finance lease transactions that do not involve transfer of ownership
1. Leased asset quality
		(a) Tangible assets
Mainly production installations in the machinery segment (Machinery and equipment) and distribution vehicles in the others segment(Machinery and equipment)		(b) Intangible assets

			

Mainly software

2. Depreciation method of leased assets
Refer to “(7) Property, Plant and Equipment and Depreciation” in “2. Summary of Significant Accounting Policies.” Finance leasetransactions that do not involve transfer of ownership, entered into on and before March 31, 2008, by the Company and its domestic
consolidated subsidiaries are accounted for as operating leases.

FURUK AWA35

Annual Report 2011

The pro forma amounts representing acquisition costs, accumulated depreciation and net carrying value for the machinery and equipment
and others held under the finance leases currently accounted for as operating leases as of March 31, 2011 and 2010 were as follows:
Millions of yen

2011
Acquisition costs ...................................................................................................................................
¥ 2,718
Less accumulated depreciation .............................................................................................................. 		 1,635
Net carrying value .................................................................................................................................
¥ 1,0832010¥ 3,217
		 1,660¥ 1,557

Thousands of
U.S. dollars

2011$ 32,747
		 19,699$ 13,048

Lease payments relating to finance leases accounted for as operating leases amounted to ¥471 million ($5,675 thousand) and ¥540 million
for the years ended March 31, 2011 and 2010, respectively, which were equal to the depreciation expense of leased assets computed by thestraight-line method over the lease terms.
Future minimum lease payments including an interest element under the finance leases outstanding as of March 31, 2011 and 2010 are
summarized as follows:

Millions of yen

2011
Within one year . ...................................................................................................................................
¥
363
Over one year ........................................................................................................................................ 		
720¥ 1,0832010¥473
		 1,084¥ 1,557

Thousands of
U.S. dollars

2011$ 4,373
		 8,675$ 13,048(2) Operating leases
The future minimum lease payments under lease agreements other than finance leases as of March 31, 2011 and 2010 are summarized asfollows:

Millions of yen

Within one year . ...................................................................................................................................
¥
Over one year ........................................................................................................................................ 		
¥

2011
15
28
43

¥
		
¥

2010
12
14
26

Thousands of
U.S. dollars

$
		
$

2011
181
337
518

12. Financial Instruments
1. Overview(1) P olicy for financial instruments
In consideration of annual financial plan, the Furukawa Group raises funds through mainly bank borrowings and bond issues. Further,
the Furukawa Group raises short-term capital through mainly bank borrowings. The Furukawa Group uses derivatives for the purpose of
reducing risk and does not enter into derivatives for speculative or trading purpose.

FURUK AWA36

Annual Report 2011

(2) T ypes of financial instruments and related risk
	Trade receivables—trade notes and accounts receivables—are exposed to credit risk in relation to customers. In addition, the Furukawa Groupis exposed to foreign currency exchange risk arising from receivables denominated in foreign currencies. In principle, the foreign currency
exchange risks deriving from the trade receivables denominated in foreign currencies are hedged by forward foreign exchange contracts.
		Marketable securities and investment securities are exposed to market risk. Those securities are composed of mainly the shares ofcommon stock of other companies with which the Furukawa Group has business relationships.
		

Substantially all trade payables—trade notes and accounts payables—have payment due date within one year.

		

Short-term loans are raised mainly in connection with business activities, and long-term debt is taken out principally for the purposeof making capital investments. Long-term debt with variable interest rate is exposed to interest rate fluctuation risk. However, to reducesuch risk and fix interest expense for long-term debt bearing interest at variable rates, the Furukawa Group utilizes rate swap transactions
as a hedging instrument for each contract. The assessment of effectiveness is omitted since it meets conditions of specific matching criteria
for interest rate swap.
		Regarding derivatives, the Furukawa Group enters into forward foreign exchange contracts to reduce the foreign currency exchange

risk arising from the receivables and payables denominated in foreign currencies. The Furukawa Group also enters into interest rate swap
transactions to reduce fluctuation risk deriving from interest payable for debt bearing interest at variable rates. The Furukawa Group also
enters into forward commodity exchange contracts to reduce fluctuation risk of commodity price of inventories. Information regarding themethod of hedge accounting, hedging instruments, hedged items, hedging policy and the assessment of effectiveness of hedging activities
is found in “(14) Hedging Activities” in “2. Summary of Significant Accounting Policies.”(3) Risk management for financial instruments(a) Monitoring of credit risk (the risk that customers or counterparties may default)		In accordance with the internal policies of the Furukawa Group for managing credit risk arising from receivables, each related divisionmonitors credit worthiness of their main customers periodically, and monitors due dates and outstanding balances by individual customer.
			

In utilizing derivatives, the Furukawa Group has transactions with major financial institutions or trading companies which havehigh credit to reduce credit risk.
(b) Monitoring of market risks (the risks arising from fluctuations in foreign exchange rates, interest rates and others)		For trade receivables and payables denominated in foreign currencies, the Furukawa Group identifies the foreign currency exchange
risk for each currency on a monthly basis and principally enters into forward foreign exchange contracts to hedge such risk. In order tomitigate the interest rate risk for loans payable and bonds bearing interest at variable rates, the Furukawa Group enters into interest
rate swap transactions.
			

For marketable securities and investment securities, the Furukawa Group periodically reviews the fair values of such financial

instruments.
			

In conducting or managing derivative transactions, each division makes transactions by approval of the directors of transaction-

related divisions.
(c) Monitoring of liquidity risk (the risk that the Furukawa Group may not be able to meet its obligations on scheduled due dates)
		Based on the report from each division, the Furukawa Group prepares and updates its cash flow plans on a monthly basis to manage
liquidity risk.
(4) Supplementary explanation of the estimated fair value of financial instruments
	The value of financial instruments is based on their quoted market place, if available. When there is no quoted market price available,
fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions
and factors could result in different fair value. In addition, the notional amounts of derivatives in “13. Derivative Transactions” are notnecessarily indicative of the actual market risk involved in derivative transactions.

FURUK AWA37

Annual Report 2011

2. Estimated fair value of financial instruments
	Carrying value of financial instruments on the consolidated balance sheets as of March 31, 2011 and 2010 and estimated fair value are shownas follows. The following table does not include financial instruments for which it is extremely difficult to determine the fair value. (Please refer
to Note 2 below.)
Millions of yen

Carrying value

Assets(1) Cash and cash equivalents ................................................ ¥		(2) Trade notes and accounts receivable . ............................... 		
(3) Investments in securities ................................................... 		
Total assets		Thousands of U.S. dollars

2011

2011

Estimated fairvalue

Estimated fairvalue

16,271 ¥		
25,197 		
16,266 		
57,734 		

Difference

Carrying value

Difference

16,271 ¥		
25,197 		
16,266 		
57,734 		————$		 196,036 $		 196,036 $				 303,578 		 303,578 		
		 195,976 		 195,976 		
		 695,590 		 695,590 		

—
—
—
—

Liabilities(1) Trade notes and accounts payable .................................... ¥		 23,653 ¥		 23,653 ¥		(2) Short-term loans (*1) ........................................................ 		 12,858 		 12,858 		
(3) Long-term debt (*1) ......................................................... 		 76,406 		 76,866 		
Total liabilities . .......................................................................... 		 112,917 		 113,377 		
Derivatives (*2) .......................................................................... ¥		
151 ¥		151 ¥		

—
—
460
460
—

$		 284,976 $		 284,976 $		
		 154,916 		 154,916 		
		 920,554 		 926,096 		
		1,360,446 		1,365,988 		$		
1,819 $		
1,819 $		

—
—
5,542
5,542
—

Millions of yen

2010
Carrying value

Estimated fairvalue

Difference

Assets(1) Cash and cash equivalents ..............................................................................................................
(2) Trade notes and accounts receivable . .............................................................................................
(3) Investments in securities .................................................................................................................
Total assets . ............................................................................................................................................

¥		
		
		
		

20,257 ¥		
24,427 		
18,973 		
63,657 		

————Liabilities(1) Trade notes and accounts payable ..................................................................................................
(2) Short-term loans (*1) ......................................................................................................................
(3) Long-term debt (*1) .......................................................................................................................
Total liabilities . ........................................................................................................................................
Derivatives (*2) ........................................................................................................................................

¥		 26,426 ¥		 26,426 ¥				 13,077 		 13,077 		
		 81,637 		 82,187 		
		 121,140 		 121,690 		¥		
145 ¥		145 ¥		

—
—
550
550
—

20,257 ¥		
24,427 		
18,973 		
63,657 		

(*1) Current portion of long-term debt is included in long-term debt.
(*2) T he value of assets and liabilities arising from derivatives is shown at net value, with the amount in parentheses representing net liability
position.
Notes:
1. Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions
Assets(1) Cash and cash equivalents, (2) Trade notes and accounts receivable
Since these items are settled in a short period of time, their carrying value approximates fair value.

FURUK AWA38

Annual Report 2011

(3) Investments in securities
The fair value of stocks is based on market prices. For information on securities classified by holding purpose, please refer to“5. Investments in Securities” to the consolidated financial statements.
Liabilities(1) Trade notes and accounts payable, (2) Short-term loans
Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Long-term debt
The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest rate to be
applied if similar new loans were entered into.
Derivative transactions
Please refer to “13. Derivative Transactions” to the consolidated financial statement.
2. Financial instruments for which it is extremely difficult to determine the fair value as of March 31, 2011 and 2010
Thousands of
U.S. dollars

Millions of yen

Unlisted stocks ......................................................................................................................................

2011¥ 8,3402010¥ 8,4682011$100,482

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are notincluded in the above table of “(3) Investments in securities.”
3. Redemption schedule for receivables and marketable securities with maturities after March 31, 2011 and 2010 are as follows:
For the year ended March 31, 2011
Millions of yen

Due in one year or less

Cash deposit . ..............................................................................
¥
Trade notes and accounts receivable . .......................................... 		
		
Total ...................................................................................
¥

Thousands of U.S. dollars

16,19525,19741,392Due in one year or less

Cash deposit . ..............................................................................
$ 195,121
Trade notes and accounts receivable . .......................................... 		 303,578
		Total ...................................................................................
$ 498,699

Due after one year
through five years

		
		
		

—
—
—

Due after one year
through five years

		
		
		

—
—
—

Due after five years
through ten years

		
		
		

—
—
—

Due after five years
through ten years

		
		
		

—
—
—

Due after ten years

		
		
		

—
—
—

Due after ten years

		
		
		

—
—
—

For the year ended March 31, 2010
Millions of yen

Due in one year or less

Cash deposit . ..............................................................................
¥
Trade notes and accounts receivable . .......................................... 		
		
Total ...................................................................................
¥

20,18024,42644,606

Due after one year
through five years

		
		
		

—
—
—

Due after five years
through ten years

		
		
		

—
—
—

4. The redemption schedule for long-term debt is disclosed in “6. Short-Term Loans, Long-Term Debt and Lease Obligations.”

FURUK AWA

39

Annual Report 2011

Due after ten years

		
		
		

—
—
—

13. Derivative Transactions
The notional amounts and estimated fair value of the derivative instruments outstanding at March 31, 2011, for which hedged accounting havebeen applied, are as follows.

1. Currency-related transactions
Millions of yen
Method of hedge accounting

Principal method

Allocation method

Type of transaction

Major object of hedge

Forward foreign exchange contracts
Sell
		
U.S. dollars
		
EUR
		
U.S. dollars
Forward foreign exchange contracts
Sell
		
U.S. dollars
		
EUR
Buy
		
U.S. dollars

Contract amounts

As of March 31, 2011
Maturing after one year

Fair value

Accounts receivable
Accounts receivable
Accounts payable

¥
		
		

108
1,066
9,836

		
		
		

—
—
—

¥
		
		

(1)
(45)
(88)

Accounts receivable
Accounts receivable

¥
		

136
21

		
		

—
—

		
		

(*)
(*)

¥

4,752

		

—

		

(*)

Accounts payable

Thousands of U.S. dollars
Method of hedge accounting

Principal method

Allocation method

Type of transaction

Major object of hedge

Forward foreign exchange contracts
Sell
		
U.S. dollars
		
EUR
		
U.S. dollars
Forward foreign exchange contracts
Sell
		
U.S. dollars
		
EUR
Buy
		
U.S. dollars

Contract amounts

As of March 31, 2011
Maturing after one year

Fair value

Accounts receivable
Accounts receivable
Accounts payable

$
		
		

1,301
12,843
118,506

		
		
		

—
—
—

$
		
		

(12)
(542)
(1,060)Accounts receivable
Accounts receivable

$
		

1,639
253

		
		

—
—

		
		

(*)
(*)

$

57,253

		

—

		

(*)

Accounts payable

Note: The fair values of forward currency contracts are based on exchange rates or prices provided by financial institutions.
(*) The fair values by means of the allocation method for foreign exchange contracts are included in the fair values of the hedged accounts
receivables and payables because the derivative transactions are treated as a part of hedged accounts receivables and payables.
2. Interest-related transaction
Millions of yen
Method of hedge accounting

Special accounting
procedure for interest
rate swap

Type of transaction

Receive/floating and pay/fixed

Major object of hedge

Long-term debt

Contract amounts¥

34,508

As of March 31, 2011
Maturing after one year¥

29,104

Fair value

		

(*)

Thousands of U.S. dollars
Method of hedge accounting

Special accounting
procedure for interest
rate swap

Type of transaction

Receive/floating and pay/fixed

Major object of hedge

Long-term debt

Contract amounts$

415,759

As of March 31, 2011
Maturing after one year$

350,651

Fair value

		

(*)

(*) The fair values by means of the special accounting procedure for interest rate swap contracts are included in the fair values of the hedged
long-term debt because the derivative transactions are treated as a part of hedged long-term debt.

FURUK AWA40

Annual Report 2011

3. Commodity-related transactions
Millions of yen
Method of hedge accounting

Principal method

Type of transaction

Major object of hedge

Forward product contracts
Sell		
CopperBuy		CopperContract amounts

As of March 31, 2011
Maturing after one year

Fair value

Raw material

		

—

		

—

		

—

Raw material

¥

6,244

		

—

¥

(17)

Thousands of U.S. dollars
Method of hedge accounting

Principal method

Type of transaction

Major object of hedge

Forward product contracts
Sell		
CopperBuy		CopperContract amounts

As of March 31, 2011
Maturing after one year

Fair value

Raw material

		

—

		

—

		

—

Raw material$

75,229

		

—

$

(205)

Note: The fair values of forward product contracts are based on the price provided by trading companies.
(*) Since short position trade is dependent on copper price at the time when copper will be received, amount of contract and the fair value as ofMarch 31, 2011 does not exist and is not disclosed.

14. Employees’ Retirement Benefits
The balances of the retirement benefit obligation and plan assets, funded status and the amounts recognized in the consolidated balance sheets
as of March 31, 2011 and 2010 are summarized as follows:

Retirement benefit obligation ................................................................................................................
Plan assets at fair value . ........................................................................................................................
Unfunded status . ..................................................................................................................................
Unrecognized net obligation at transition . ............................................................................................
Unrecognized actuarial loss ...................................................................................................................
Unrecognized prior service cost .............................................................................................................
Prepaid pension cost .............................................................................................................................
Accrued employees’ retirement benefits . ..............................................................................................

Millions of yen

Thousands of
U.S. dollars

2011
2010
¥		 (15,165) ¥		 (15,117)
		 9,390 		 11,212
		 (5,775) 		 (3,905)
		517 		
647
		 7,653 		 6,605
		279 		
226
		 (4,299) 		 (5,162)¥		 (1,625) ¥		 (1,589)2011$		(182,711)
		 113,133
		 (69,578)
		 6,229
		 92,205
		 3,361
		 (51,795)$		 (19,578)

The components of retirement benefit expenses for the years ended March 31, 2011 and 2010 were as follows:
Millions of yen

Thousands of
U.S. dollars

Service cost ...........................................................................................................................................
Interest cost . .........................................................................................................................................
Expected return on plan assets . ............................................................................................................
Amortization of net retirement benefit obligation at transition .............................................................
Amortization of actuarial loss ................................................................................................................
Amortization of prior service cost . ........................................................................................................
Retirement benefit expenses .................................................................................................................
Employees’ contributions to the defined benefit pension plans .............................................................

2011
¥
719
		
348
		
(105)
		
135
		
885
		
22
		 2,004
		
4

2010
¥
627
		
360
		
(156)
		
32
		 1,052		22
		 1,937
		8

2011$ 8,663		 4,193
		 (1,265)
		 1,627
		 10,662
		265
		 24,145
		
48

Total ......................................................................................................................................................

¥ 2,008¥ 1,945$ 24,193

FURUK AWA41

Annual Report 2011

The assumptions used in accounting for the above plans were as follows:
2011
Discount rates .......................................................................................................................................
mainly 2.1%
Expected return on plan assets . ............................................................................................................ 		mainly 2.0%

2010
mainly 2.2%
		mainly 2.0%

15. Income Taxes
The reconciliation between the effective tax rates reflected in the consolidated statements of income and the statutory tax rates for the years
ended March 31, 2011 and 2010 were summarized as follows:

Statutory tax rates ......................................................................................................................................................
Non-deductible expenses for tax purposes .................................................................................................................
Non-taxable dividends and other income ...................................................................................................................
Inhabitants per capital tax ..........................................................................................................................................
Equity in earnings and losses of affiliates ....................................................................................................................
Amortization of goodwill and negative goodwill ........................................................................................................
Changes in valuation allowance .................................................................................................................................
Other .........................................................................................................................................................................
Effective tax rates .......................................................................................................................................................

2011
		 40.7%
		 10.2
		 (14.9)
		 21.1
		 (9.7)
		 10.4
		 (31.4)
		 (0.9)
		 25.5%2010		 40.7%
		 4.9		 (4.3)
		 10.8
		 3.8
		 (1.0)
		 (21.3)
		 0.6
		 34.2%

Deferred tax assets and liabilities as of March 31, 2011 and 2010 consisted of the following:
Millions of yen

Deferred tax assets:
Allowance for doubtful accounts ....................................................................................................
Accrued employees’ retirement benefits .........................................................................................
Impairment loss on property, plant and equipment . .......................................................................
Investments in securities .................................................................................................................
Accrued expenses ...........................................................................................................................
Net operating loss carryforwards ....................................................................................................
Land ...............................................................................................................................................
Other ..............................................................................................................................................
Total gross deferred tax assets ........................................................................................................
Valuation allowance ........................................................................................................................
Total deferred tax assets .................................................................................................................
Deferred tax liabilities:
Statutory reserves provided for tax purposes ..................................................................................
Gain from establishment of trust for retirement benefit plans .........................................................
Land.................................................................................................................................................
Capitalized interest of a foreign subsidiary ......................................................................................
Other ..............................................................................................................................................
Total deferred tax liabilities .............................................................................................................
Net deferred tax liabilities ...............................................................................................................
Deferred income taxes on surplus on the revaluation of land ..........................................................

FURUK AWA

42

Annual Report 2011

Thousands of
U.S. dollars

2011

2010

2011

¥		
311
		 6,224
		 3,166
		 3,729
		
117
		 16,280
		 2,772
		
950
		 33,549
		 (22,443)
		 11,106¥		
375
		 5,798
		 3,139
		 3,866		87		 15,933
		 2,638
		 1,443
		 33,279
		 (22,737)
		 10,542$		 3,747
		 74,988
		 38,145
		 44,928
		 1,410
		196,145
		 33,398
		 11,444
		404,205
		(270,398)
		133,807

		 (1,536)
		 (4,327)
		 (10,545)
		 (1,969)		(131)
		 (18,508)¥		 (7,402)¥		 (2,767)

		 (1,593)
		 (4,327)
		 (10,545)
		 (1,604)		(383)
		 (18,452)¥		 (7,910)¥		 (2,806)

		 (18,506)
		 (52,133)
		(127,048)
		 (23,723)
		 (1,578)
		(222,988)$		 (89,181)$		 (33,337)

16. Contingent Liabilities
Contingent liabilities as of March 31, 2011 and 2010 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2011
Notes receivable discounted and endorsed . ..........................................................................................
¥ 1,885
Loans guaranteed . ................................................................................................................................ 		 2,351

2010¥ 1,531		 2,792

2011$ 22,711
		 28,325

17. Write-Down of Inventories
The amounts of write-down of inventories, included in cost of sales for the year ended March 31, 2011 amounted to ¥13 million ($157 thousand).
For the year ended March 31, 2010, the Company reversed write-down in the amount of ¥536 million and credited it to costs of sales.

18. Other Income (Expenses)—Other, Net
Other income (expenses) — other, net for the years ended March 31, 2011 and 2010 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Employment adjustment subsidy ...........................................................................................................
Gain related to copper smelting business in Australia ............................................................................
Gain or loss on disposal and sales of property, plant and equipment . ...................................................
Gain on sales of investments in securities ..............................................................................................
Loss on adjustment for changes of accounting standard for asset retirement obligations ......................
Loss on disaster .....................................................................................................................................
Payments for idle mines . .......................................................................................................................
Write-down of investments in securities ................................................................................................
Provision for environmental measures ...................................................................................................
Loss on business withdrawal .................................................................................................................
Impairment loss on property, plant and equipment ...............................................................................

¥
		
		
		
		
		
		
		
		
		
		

2011
35
—
(67)
0
(109)
(216)
(567)
(181)
—
—
(100)

2010
¥
254
		 1,345
		
126
		
598
		
—
		
—
		
(562)
		
0
		
(214)
		
(762)
		
(266)

Other, net . ............................................................................................................................................ 		
(427) 		¥ (1,632) ¥

34
553

2011
$
422
		
—
		
(807)
		
0
		 (1,313)
		 (2,602)
		 (6,831)
		 (2,181)
		
—
		
—
		 (1,205)
		 (5,145)$(19,662)

19. Segment Information
Effective the year ended March 31, 2011, the Company adopted “Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information” (ASBJ Statement No.17, March 27, 2009) and “Guidance on the Accounting Standard for Segments of an Enterprise andRelated Information” (ASBJ Guidance No.20, March 21, 2008), which is new accounting for disclosures about segments of an enterprise andrelated information. Segment information for the year ended March 31, 2010 has been restated in accordance with such accounting standards forcomparative purposes.
The reportable segments are constituent units of the Furukawa Group for which separate financial information is available. The Board of Directors
periodically examines these segments for the purpose of deciding the allocations of management resources and evaluating operating performance.

FURUK AWA43

Annual Report 2011

The Company mainly manufactures and sells machinery, smelts on consignment and sells copper and manufactures and sells electronicmaterials and chemicals.
Under the holdings company structure, each main Group company plans domestic and overseas comprehensive strategies about theirproducts, and the Company manages and supervises them.
The Furukawa Group therefore categorizes segments classified by products based on main Group companies. The nine reportable segments
are as follows: Industrial Machinery, Construction and Mining Machinery (Rock Drills), UNIC Machinery, Metals, Electronic Materials, Chemicals,
Paints, Real Estate and Fuels.
Main products and services belonging to each segment are as follows:(a) Industrial Machinery
Manufacture and sale environment machinery, pumps, plants, stone crushers, steel bridges and casting(b) Construction and Mining Machinery (Rock Drills)
Manufacture and sale rock drills such as breakers, crushers, crawler drills and tunnel drill jumbos(c) UNIC Machinery
Manufacture and sale truck-mounted cranes (UNIC cranes) and vehicle carriers (UNIC carriers)(d) Metals
After buying ore, sale electrolytic copper, electrolytic gold, electrolytic silver and sulfuric acid which is smelted on consignment by joint
smelting company(e) Electronic Materials
Manufacture and sale high-purity metallic arsenic, gallium phosphorus polycrystals, aluminum nitride ceramics, optical components andcores and coils(f) Chemicals
Manufacture and sale cuprous oxide, polyferric sulfate, sulfuric acid, titanium oxide and functional materials(g) Paints
Manufacture and sale paints, acrylic rubber and adhesives(h) Real Estate
Lease real estate(i) Fuels
Purchase and sale perineum such as heavy oil, light oil and gasoline
The accounting method used for reportable segments is the same as the method stated in “2. Summary of Significant Accounting Policies.”
Operating income (loss) of reportable segments is based on operating income in the consolidated statements of income. Intersegment sales andtransfers are recorded based on the actual market prices.

FURUK AWA

44

Annual Report 2011

Segment information of the Furukawa Group for the years ended March 31, 2011 and 2010 was as follows:Year ended March 31, 2011

Millions of yen

Industrial
MachinerySales and operating income (loss)
Outside customers . .......................................................................
Intersegment .................................................................................
Total ..............................................................................................
Operating income (loss) . ...................................................................
OthersSegment assets .................................................................................
Depreciation . ....................................................................................
Investments in equity method and affiliates ......................................
Increase in the tangible fixed assets and the intangible fixed assets . .

Construction
and Mining
Machinery(Rock Drills)

UNIC
Machinery

MetalsElectronic
Materials

Chemicals¥		 10,655 ¥		 23,880 ¥		 12,490 ¥		 79,980
		 1,609 		
24 		
71 		
587
		 12,264 		 23,905 		 12,562 		 80,566¥		(30) ¥		 (350) ¥		 (187) ¥		 1,495¥		 7,147 ¥		 5,076
		
49 		
808
		 7,196 		 5,885¥		 1,280 ¥		
269¥		 16,854
		
400
		
—
		
175

¥		 25,675
		
683
		
—
		
237

¥		 14,712
		
463
		
8
		
160

¥		 7,660 ¥		 16,112
		302 		
265
		671 		
—
		
87 		
50

PaintsReal Estate

Fuels

Year ended March 31, 2011¥		 32,934
		
308
		 3,771
		
149

Millions of yen

Sales and operating income (loss)
Outside customers . .......................................................................
Intersegment .................................................................................
Total ..............................................................................................
Operating income (loss) . ...................................................................
OthersSegment assets .................................................................................
Depreciation . ....................................................................................
Investments in equity method and affiliates ......................................
Increase in the tangible fixed assets and the intangible fixed assets . .

OthersAdjustments

Consolidated¥		 15,041 ¥		 1,578 ¥		 9,005 ¥		
786 ¥		— ¥		165,638
		23 		
142 		
306 		 1,307 		 (4,926) 		
—		 15,063 		 1,720 		 9,311 		 2,092 		 (4,926) 		165,638¥		(93) ¥		
635 ¥		
(57) ¥		(92) ¥		(49) ¥		 2,821¥		 14,684
		
279
		
196
		
340

¥		 23,296
		
237
		
—
		
308

Industrial
Machinery

Construction
and Mining
Machinery(Rock Drills)

Year ended March 31, 2011

¥		 1,842 ¥		 4,329 ¥		 38,136
		
10 		
94 		
2
		
— 		
468 		
—
		
3 		
26 		
398

¥		196,234
		 3,034
		 5,114
		 1,933

Thousands of U.S. dollars

Sales and operating income (loss)
Outside customers . .......................................................................
Intersegment .................................................................................
Total ..............................................................................................
Operating income (loss) . ...................................................................
OthersSegment assets .................................................................................
Depreciation . ....................................................................................
Investments in equity method and affiliates ......................................
Increase in the tangible fixed assets and the intangible fixed assets . .

Electronic
Materials

Chemicals$		128,373 $		287,711 $		150,482 $		963,614
		 19,386 		
289 		
855 		 7,072
		147,759 		288,012 		151,349 		970,675$		 (361) $		 (4,217) $		 (2,253) $		 18,012$		 86,108
		
590
		 86,699$		 15,422$		 61,157
		 9,735
		 70,904$		 3,241$		203,060
		 4,819		—		 2,108$		309,337
		 8,229		—		 2,855$		 92,289
		 3,639
		 8,084		 1,048$		194,120
		 3,193
		
—
		
602

PaintsReal Estate

Adjustments

Consolidated

Year ended March 31, 2011

UNIC
Machinery$		177,253
		 5,578		96
		 1,928

Metals$		396,795
		 3,711
		 45,434
		 1,795

Thousands of U.S. dollars

Sales and operating income (loss)
Outside customers . .......................................................................
Intersegment .................................................................................
Total ..............................................................................................
Operating income (loss) . ...................................................................
OthersSegment assets .................................................................................
Depreciation . ....................................................................................
Investments in equity method and affiliates ......................................
Increase in the tangible fixed assets and the intangible fixed assets . .

FURUK AWA

Fuels

Others$		181,217 $		 19,012
		277 		 1,711
		181,482 		 20,723$		 (1,120) $		 7,651$		108,494 $		 9,471 $		
— $		 1,995,639
		 3,687 		 15,747 		(59,349) 		
—		112,181 		 25,204 		(59,349) 		 1,995,639$		 (687) $		 (1,108) $		 (592) $		 33,988$		176,916
		 3,361
		 2,361
		 4,096$		 22,193
		
120
		
—
		
36

45

$		280,675
		 2,855		—		 3,711

Annual Report 2011$		 52,157
		 1,133
		 5,639
		313$		459,470
		
25
		
—
		 4,797$		2,364,265
		 36,663
		 61,614
		 23,289

Year ended March 31, 2010

Millions of yen

Industrial
MachinerySales and operating income (loss)
Outside customers . .......................................................................
Intersegment .................................................................................
Total ..............................................................................................
Operating income (loss) . ...................................................................
OthersSegment assets .................................................................................
Depreciation . ....................................................................................
Investments in equity method and affiliates ......................................
Increase in the tangible fixed assets and the intangible fixed assets . .

Construction
and Mining
Machinery(Rock Drills)

UNIC
Machinery

Electronic
Materials

MetalsChemicals¥		 12,784
		 1,513
		 14,297¥		433¥		 20,387 ¥		 11,143 ¥		 71,133
		
19 		
26 		
500
		 20,406 		 11,169 		 71,633¥		 (2,585) ¥		 (871) ¥		 3,224¥		 5,970 ¥		 5,025
		120 		
260
		 6,089 		 5,285¥		658 ¥		104

¥		 17,743
		
408
		
—
		
365

¥		 24,635
		
696
		
—
		
582

¥		 15,026
		
465
		
98
		
554

¥		 7,930 ¥		 16,216
		
345 		
284
		670 		—
		106 		
121

PaintsReal Estate

Fuels

Year ended March 31, 2010

¥		 30,408
		
309
		 3,611
		
205

Millions of yen

Sales and operating income (loss)
Outside customers . .......................................................................
Intersegment .................................................................................
Total ..............................................................................................
Operating income (loss) . ...................................................................
OthersSegment assets .................................................................................
Depreciation . ....................................................................................
Investments in equity method and affiliates ......................................
Increase in the tangible fixed assets and the intangible fixed assets . .

OthersAdjustments

Consolidated¥		 3,693 ¥		 2,044
		
5 		
152
		 3,697 		 2,196¥		(19) ¥		 1,129¥		 9,893 ¥		
853 ¥		— ¥		142,925
		215 		 1,206 		 (4,016) 		
—		 10,108 		 2,061 		 (4,016) 		142,925¥		(29) ¥		 (377) ¥		(69) ¥		 1,598¥		 15,287
		
66
		
203
		
59

¥		 2,401 ¥		 4,017 ¥		 47,527
		
12 		
153 		
2
		— 		646 		
—
		
16 		
99 		
593

¥		 23,584
		
270
		
—
		
236

¥		204,774
		 3,010
		 5,228		 2,936(Related information)
Year ended March 31, 2011
1. Information regarding products and services
Millions of yen
CopperOthersSales for outside customers ................................................................................................................... ¥		 62,720¥		 102,919

Total¥		165,639

Thousands of U.S. dollars
CopperSales for outside customers ................................................................................................................... $		755,663

OthersTotal$		1,239,988 $		1,995,651

2. Geographical information(1) Net sales
Millions of yen
Japan

Asia

OthersTotal¥134,773¥19,166¥11,700¥165,639

Japan

Asia

OthersTotal$1,623,771$230,916$140,964$1,995,651

Thousands of U.S. dollars(2) Property, plant and equipment
The geographic segment information for the year ended March 31, 2011 has not been presented, because the total assets in Japan exceed 90%
of consolidated totals.

FURUK AWA46

Annual Report 2011

3. Information regarding main customers
Millions of yen
Name of Customer

Sales Volume

Related Segment

Furukawa Electric Co., Ltd.

¥26,626

MetalsThousands of U.S. dollars
Name of Customer

Sales Volume

Related Segment

Furukawa Electric Co., Ltd.

$320,795

Metals

4. Loss on impairment of fixed assets in reporting segments
Millions of yen

Industrial
Machinery

Construction
and Mining
Machinery(Rock Drills)

UNIC
Machinery

MetalsElectronic
Materials

Chemicals

Loss on impairmentof fixed assets

—

—

—

—

—

—

Loss on impairmentof fixed assets

—

—

—

—

—

PaintsReal Estate

— ¥

Fuels

OthersAdjustments Consolidated

22 ¥

3

— ¥

75 ¥

100

265 $

36

— $

904 $ 1,205

Thousands of U.S. dollars—— $5. Amortization of goodwill and unamortized goodwill in reporting segments
Millions of yen

Industrial
Machinery

Construction
and Mining
Machinery(Rock Drills)

UNIC
Machinery

MetalsElectronic
Materials

Balance as of March
31, 2011

—

— ¥

28

—

—

Balance as of March
31, 2011

—

— $

337

—

—

Chemicals— ¥Paints571

Real Estate

Fuels

OthersAdjustments Consolidated

—

—

—

— ¥

599

—

—

—

— ¥ 7,217

Thousands of U.S. dollars— $ 6,880

6. Gain on negative goodwill in reporting segments
Not applicable.

FURUK AWA47

Annual Report 2011

20. Investment and Rental Properties
The Company and certain consolidated subsidiaries own office buildings for lease mainly in Tokyo and other areas. Effective the year ended March
31, 2011, rental income is ¥678 million ($8,169 thousand), gain on sales of rental properties is ¥2 million ($24 thousand), loss on disposal andsales of rental properties is ¥36 million ($434 thousand) and impairment loss on rental properties is ¥100 million ($1,205 thousand). The carrying
value in the consolidated balance sheets and corresponding fair value of those properties are as follows:
Carrying Value
As of March
31, 2010

Fair Value
As of March
31, 2011

Net change

As of March
31, 2011(Millions of yen)¥

27,566

¥

1,614

¥

29,180¥Carrying Value$

332,120

Fair Value

As of March
31, 2011(Thousands of U.S. dollars)

As of March
31, 2010

As of March
31, 2011

Net change$

19,44630,358$351,566$

365,759

Notes:
1. The carrying value represents the acquisition cost less accumulated depreciation and cumulative impairment loss.
2. The components of net change in carrying value included increases mainly related to changes to rental properties involved in the removal of
office tenants due to real estate development in the amount of ¥2,381 million ($28,687 thousand) and decreases mainly due to amortizationin the amount of ¥232 million ($2,795 thousand), decrease of rental area in the amount of ¥222 million ($2,675 thousand) and retirement in
the amount of ¥209 million ($2,518 thousand).
3. The fair value is mainly estimated in accordance with appraisal standards for valuing real estate.

FURUK AWA48

Annual Report 2011

FURUK AWA

49

Annual Report 2011

Corporate Data
(As of March 31, 2011)

Directors and Auditors

Company Name: Furukawa Co., Ltd.
Head Office: 2-3, Marunouchi 2-chome, Chiyoda-ku, Tokyo(As of June 29, 2011)

President and Representative Director

Nobuyoshi Soma

100-8370, Japan

Senior Managing Director

Manabu Zama

Tel: +81-3-3212-6570 Fax: +81-3-3212-6578

Managing Director

Yoshihito EmotoManaging Director

Susumu Nakamura

Managing Director

Toshio Matsumoto

Director

Naohisa Miyakawa

Stock Exchange Listing: Tokyo

Outside Director

Junnosuke Furukawa

Securities Code Number: 5715

Statutory Auditor

Tadatoshi Nanpei

Employees: Consolidated 2,728; Non-consolidated 215

Statutory Auditor

Masaya Kouzaki

Outside Company Auditor

Tamiki Ishihara

Outside Company Auditor

Nobuyuki Tomotsune

Outside Company Auditor

Yoshiki Sato

Date of Foundation: August 1875
Date of Establishment: April 1918
Number of Shares Authorized: 800,000,000 shares
Number of Shares Outstanding: 404,455,680 shares

Stock Transfer Agent: The Chuo Mitsui Trust and Banking
Company, Limited
33-1, Shiba 3-chome, Minato-ku,
Tokyo 105-8574, Japan
Principal Shareholders
Number of Percentage ofTotal Shares
Shares(%)(Thousands)

Asahi Mutual Life Insurance Co.

27,923

6.90

Executive Officers

Seiwa Sogo Tatemono Co., Ltd.

15,034

3.71(As of June 29, 2011)

Sompo Japan Insurance Inc.

12,4293.07

Senior Managing Executive Officer

Manabu Zama

The Master Trust Bank of Japan, Ltd. (trust account)

11,821

2.92

Managing Executive Officer

Yoshihito Emoto

Japan Trustee Services Bank, Ltd. (trust account)

11,2902.79Managing Executive Officer

Susumu Nakamura

Chuo Real Estate Co., Ltd.

9,812

2.42

Managing Executive Officer

Toshio Matsumoto

Fujitsu Limited

9,617

2.37

Senior Executive Officer

Naohisa Miyakawa

Furukawa Electric Co., Ltd.

8,777

2.17

Senior Executive Officer

Toshikazu Nakagawa

Fuji Electric Co., Ltd.

8,620

2.13

Senior Executive Officer

Yasuji Tomiyama

The Yokohama Rubber Company, Limited

8,510

2.10

Senior Executive Officer

Akira Usui

Senior Executive Officer

Kouichiro Umezaki

Executive Officer

Osamu Watanabe

Executive Officer

Saburou Saruhashi

Executive Officer

Norihiro Yanagisawa

Executive Officer

Kenji Ichimura

Executive Officer

Akinori Ota

Executive Officer

Yasufumi Watanabe

Executive Officer

Minoru Iwata

Composition of Shareholders

Foreign Institutions
6.05%
Other JapaneseCompanies
22.73%

Financial Instruments Firms(Securities Companies)
3.74%
Financial
Institutions
26.46%

Individuals
and Others
41.02%

URL: http://www.furukawakk.co.jp/e_index.htm

FURUK AWA50

Annual Report 2011

Corporate History

1875 Began the operation of the Kusakura
Copper Mine in Niigata (Company
foundation).

1987 Bought UNIC Corporation (manufacturer of truck-mounted cranes).

1877 Began the operation of the Ashio
Copper Mine in Tochigi.

1989 The Japanese name changed from
Furukawa Kogyo Kabushiki Kaisha
to Furukawa Kikai Kinzoku Kabushiki
Kaisha.

1900 Set up a machinery works at the
Ashio Copper Mine and entered into
the machinery business.

The Ashio Copper Mine is where the
Furukawa Company Group began.

“UNIC” has become a synonym for truckmounted cranes in Japan.

1990 Bought an American breaker sales
and manufacturing company.

1914 Manufactured the first rock drill inJapan.
1918 Spun off mining business from Furukawa General Partnership and established Furukawa Mining Co., Ltd.

1997 Established a manufacturer of UNIC
products/components, Furukawa
UNIC (Thailand) Co., Ltd., in Thailand.

The first domestic rock drill was developedat Ashio.

1998 Established a sales company of rock
drill products, Furukawa Rock Drill
Europe B.V., in Holland.

1944 Bought Osaka Smelter of Toa Chemical Smelting Co., Ltd. and established it as Osaka Cementation and
Refining. Entered into the chemicalbusiness.
Built the Oyama Works of the Machinery Division of the Ashio Copper
Mine in Tochigi.

1999 Moved the Materials Research Laboratory to Tsukuba City in Ibaraki.

At the Oyama Works, pumps and mining
machinery for copper mines were
manufactured, not only for internal use
but also to sell externally.

2003 Established Taian Furukawa Machinery Co., Ltd. — a joint company forthe manufacturing and distributionof UNIC cranes in China.
2005 Spun off the Machinery business,
Metals business, and Electronic Materials and Chemicals business andshifted to a group management
structure as the Furukawa Company
Group to enhance management.

1950 Built the Takasaki Works of the Rock
Drill Division in Gunma.

1951 Began manufacturing of titanium dioxide and cuprous oxide at Osaka
Cementation and Refining.

1962 Completed the Furukawa/Outokumpu flash smelting plant at Ashio
Smelting and Refining.

This is an affiliate company for the UNIC
business established in Rayong, Thailand,
which manufactures truck-mounted cranes
and other products.

At the Takasaki Works, rock drills were
mass-produced, and we establishedthe position of a leading rock drill
manufacturer.

2006 Established a rock drills sales company, Furukawa Rock Drill (Shanghai)Co., Ltd., in China.

This is an affiliate company for theconstruction and mining machinery
business established in Utrecht, Holland,
which distributes rock drills and otherproducts.

This is an affiliate company for the UNIC
business established in Taian, Shandong,
China, which manufactures and distributes
truck-mounted cranes and other products.

2007 Formed a capital and business alliance for the GaN semiconductor
epi-wafer business with POWDEC
K.K.
2008 Setup the Nitride Semiconductors
Department as a GaN and related
nitride semiconductor-related research organization.

The Furukawa/Outokumpu flash smelting
plant

Completed research and development of high-purity (99.999%) metallic arsenic and commenced withthe sale of it.

This is an affiliate company which
deals with the construction and mining
machinery business established in
Shanghai, China, and distributes rock drills
and other products.

2009 Built the laboratory of the Nitride
Semiconductors Department in Oyama.
Made Tohpe Corporation, which
manufactures and distributes paints
and chemicals, into a consolidated
subsidiary.

Arsenic is one of th e b y - p r o d u c t s
generated during the smelting stage ofcopper concentrates.

FURUK AWA

51

Annual Report 2011

In 2009, the laboratory of the Nitride
Semiconductors Department was built inOyama.

2-3, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-8370, Japan